Legislative Analysis
Phone: (517) 373-8080
NATURAL GAS SAFETY VIOLATIONS
http://www.house.mi.gov/hfa
Senate Bill 366 as passed by the House Analysis available at
Sponsor: Sen. Sean McCann http://www.legislature.mi.gov
House Committee: Energy, Communications,
and Technology [Discharged]
Senate Committee: Energy and Environment
Complete to 10-31-24
(Enacted as Public Act 131 of 2024)
SUMMARY:
Senate Bill 366 would amend 1969 PA 165, which authorizes the MPSC (Michigan Public
Service Commission) to establish and enforce gas safety standards. The bill would increase the
maximum fine that may imposed for a violation of those standards and change the fine from a
civil penalty to an administrative fine. The bill would require the fines to be deposited in the
state’s general fund and allocate amounts over $200,000 in a calendar year to the MPSC for
safety education and training related to underground facilities. The bill also would require the
maximum fine amount to be adjusted annually for inflation.
The act applies to natural gas, flammable gas, and gas that is toxic or corrosive. It authorizes
the MPSC to develop and issue rules related to safety standards for pipeline facilities and the
transportation of gas. 1 With some exceptions, the act requires a person who transports gas or
owns or operates a pipeline facility to comply with those safety standards, file and comply with
a plan of inspection and maintenance, make reports and provide information, allow access to
records, and allow entry and inspection as described in the act.
Pipeline facilities includes new and existing pipeline rights-of-way, and any
equipment, facility, or building used in the transportation of gas or the treatment of gas
during the course of transportation.
Transportation of gas means the gathering, transmission, or distribution of gas by
pipeline or the storage of gas. It does not include the gathering of gas in rural locations
that lie outside the limits of an incorporated or unincorporated city, town, village, or
other designated residential or commercial area such as a subdivision, business or
shopping center, community development, or similar populated area that the MPSC
defines as a nonrural area. Transportation of gas includes gathering lines located in or
occupying the property of schools, hospitals, churches, parks, or similar public places.
Currently, a person who violates the act or a rule issued under it is subject to a fine, determined
by the MPSC, of up to $10,000 for each violation for each day the violation persists and a
maximum civil penalty of up to $500,000 for a related series of violations. This penalty can be
1
See https://ars.apps.lara.state.mi.us/AdminCode/DownloadAdminCodeFile?FileName=R%20460.20101%20to%20
R%20460.20606.pdf&ReturnHTML=True
and https://ars.apps.lara.state.mi.us/AdminCode/DownloadAdminCodeFile?FileName=R%20460.2301%20to%20R
%20460.2384.pdf&ReturnHTML=True
See also https://www.michigan.gov/mpsc/regulatory/natural-gas/michigan-gas-safety-standards
House Fiscal Agency Page 1 of 3
 recovered in a civil action in the Ingham County circuit court or be deducted from any money
the state owes the person.
Under the bill, a person that violates the act or a rule issued under it would be subject to an
administrative fine, determined by the MPSC, of up to $200,000 for each violation for each
day the violation persists and a maximum administrative fine of up to $2.5 million for a related
series of violations. This administrative fine could be recovered in a civil action in the Ingham
County circuit court or be deducted from any money the state owes the person.
The bill would require administrative fines issued under the above provisions to be deposited
in the general fund. For each calendar year, any amount of the administrative fines deposited
in the general fund that exceeds $200,000 would have to be credited to the MPSC to be used
for underground facilities safety education and training, as civil fines are used under the MISS
DIG Underground Facility Damage Prevention and Safety Act.
The bill also would require the MPSC to issue orders adjusting the maximum fine amounts for
inflation using the Consumer Price Index for the Detroit area from the federal Bureau of Labor
Statistics. The first adjustment could be made at any time after August 31, 2024, and before
October 1, 2025. The subsequent adjustments would have to be made by October 1 each year
beginning with October 1, 2025.
MCL 483.161
BRIEF DISCUSSION:
According to committee testimony, Michigan’s maximum civil fine penalty limits for pipeline
safety violations, which have not been changed in 30 years, are among the lowest in the nation.
Under the federal Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020,
Michigan’s maximum penalty limits must be substantially the same as those limits under
federal law in order for the state to retain authority to determine whether civil penalties are
warranted for pipeline safety violations and, if so, to determine the penalty amount. Unless the
current maximum penalty limits are increased, the state’s certification to administer the safety
program would be converted to an agreement under which the federal Pipeline and Hazardous
Materials Safety Administration determines relevant violations and civil penalty amounts. It
was also noted that, by providing greater flexibility to impose penalties that are appropriately
scaled to the magnitude of violations, the bill could increase public confidence in the MPSC’s
pipeline safety oversight activities. 2
HOUSE FLOOR ACTION:
The House amended the bill to statutorily provide for the administrative fines to be deposited
in the general fund and to require amounts over $200,000 in a calendar year to be used by the
MPSC for safety and education training as described above.
2
https://www.house.mi.gov/Document/?Path=2023_2024_session/committee/house/standing/energy,_communicatio
ns,_and_technology/meetings/2024-03-13-1/documents/testimony/SB366DanScripps.pdf
House Fiscal Agency SB 366 as passed by the House Page 2 of 3
FISCAL IMPACT:
Senate Bill 366 would have an indeterminate fiscal impact on the state and on local units of
government. The fiscal impact on the state would depend on the number of administrative fines
issued and, subsequently, the amount of fine revenue collected. Under the bill, revenue
collected from payment of administrative fines would be deposited into the state’s general fund,
and an amount collected over $200,000 would be paid to the MPSC to be used for underground
facilities safety education and training. The state could realize an increase in general fund
revenue. Also, under the bill, fines would be adjusted annually for inflation, so fine revenue
collected could increase on an annual basis. The fiscal impact on local court systems would
depend on how provisions of the bill affected court caseloads and related administrative costs.
Because there is no practical way to determine the number of violations that would occur,
estimates of the amount of additional revenue for the state or costs to local courts cannot be
made.
POSITIONS:
Representatives of the Michigan Public Service Commission testified in support of the bill.
(3-13-24)
The United States Department of Transportation Pipeline and Hazardous Materials Safety
Administration indicated support for the bill. (1-19-24)
Legislative Analyst: Rick Yuille
Fiscal Analyst: Robin Risko
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency SB 366 as passed by the House Page 3 of 3


Statutes affected:
Senate Introduced Bill: 483.161
As Passed by the Senate: 483.161
As Passed by the House: 483.161
Senate Concurred Bill: 483.161
Public Act: 483.161
Senate Enrolled Bill: 483.161