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California Adopts Pipeline Disclosure Law

Written by on Tuesday, 25 December 2012 6:00 pm

Apparently, it is a law of the political universe that, if there is an occurrence of a disaster - either natural or man-made - it shall be followed by the creation of new laws and/or regulations.

In September of 2010, a disaster occurred in San Bruno, California when a natural gas pipeline ruptured and exploded. Eight people were killed, dozens were injured, and there was extensive property damage.

It took a while, but the laws are beginning to emerge. In May of 2012 both houses of the California legislature passed AB 1511 (Bradford). It was approved by the Governor in July, and will become effective July 1, 2013. The bill requires "all contracts for the sale of residential real property entered into on or after July 1, 2013, to contain a specified notice pertaining to gas and hazardous liquid transmission pipelines." The notice says this:

This notice is being provided simply to inform you that information about the general location of gas and hazardous liquid transmission pipelines is available to the public via the National Pipeline Mapping System (NPMS) Internet Web site maintained by the United States Department of Transportation at . To seek further information about possible transmission pipelines near the property, you may contact your local gas utility or other pipeline operators in the area. Contact information for pipeline operators is searchable by ZIP Code and county on the NPMS Internet Web site.

Upon delivery of the notice, "the seller or broker is not required to provide information in addition to that contained in the notice regarding gas and hazardous liquid transmission pipelines…"

AB 1511 started out differently. Originally, it would have required "…the expert report, commonly used to fulfill the natural hazard disclosure requirements, to include a specified "Notice of Possible Transmission Pipeline" if the property for sale is located within 1,100 feet of a gas transmission or hazardous liquid pipeline." As noted by the Assembly legislative analyst, "These expert reports are prepared for a fee by third-party hazard disclosure providers who, under existing law, thereby assume the liability for making determinations of proximity to hazards…"

A clever observer might have noticed that this would have effectively required a Natural Hazard Report in every transaction (they occur in most anyway). Moreover, it would have to be by a provider that included a pipeline report. Surprise. The bill was supported by two companies that had ramped up their products to include pipeline reports.

However, the bill was also opposed by other Natural Hazard Disclosure companies. Why? Because they felt that the NPMS (National Pipeline Mapping System) was not a good source of data on which to base a mandatory disclosure. It was pointed out - and there was no disagreement - that the NPMS maps had a margin of error of ± 500 feet. This, they said, could lead to either a false sense of alarm or a false sense of security. Further, it was clear that these companies did not want to be put in a position of assuming liability when the data base available was so sketchy.

The result, then, was a compromise. Let the consumer decide. Essentially, the consumer is told, "Here is a website you can go to. Go look for yourself and make your decision." In that respect, the "disclosure" is much like that for Megan’s law. No one says for sure that a given sex offender is or is not located within a certain distance of the subject property. Rather, the buyer is told to go look at the website - not a model of being accurate and/or up-to-date - and is advised to make his own decision.

The NPMS website contains maps for the entire country, not just California. Again, the address is . Check it out for yourself.

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