BILL NUMBER: AB 1234 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 19, 2002
AMENDED IN SENATE JULY 5, 2001
AMENDED IN ASSEMBLY MAY 3, 2001
INTRODUCED BY Assembly Member Pescetti
FEBRUARY 23, 2001
An act to add Sections 857 and 857.1 to
add Chapter 2 (commencing with Section 3250) to Part 4 of, Division
1, of the Public Utilities Code, relating to public
utilities natural gas .
LEGISLATIVE COUNSEL'S DIGEST
AB 1234, as amended, Pescetti. Public utilities
Production and transmission of public utility
commodities and services : natural gas.
Existing law permits 3 or more natural persons engaged in the
production of gas to form a cooperative association for purposes of
selling gas produced by the association's members and performing
other specified related functions. Existing law permits an
association to acquire a real property easement from a public utility
for the purpose of accommodating the association's gas plant, and
provides that the easement shall be deemed to be held for a public
purpose by the association, provided that the Public Utilities
Commission finds that the use by the association is in the public
interest.
This bill would permit an individual, partnership, limited
liability company, or corporation (person) that is involved in the
production of natural gas, to exercise all privileges of ownership of
real or personal property as may be necessary or convenient for the
conduct and operation of, or incidental to, transmission of natural
gas and to acquire a real property easement from a public utility for
the purpose of accommodating the person's gas plant, and provides
that the easement shall be deemed to be held for a public purpose by
the person, provided the Public Utilities Commission finds that the
use by the person is in the public interest.
(1) Under existing law, no public utility may transfer or encumber
in whole or in part any property necessary or useful in the
performance of its duties to the public without prior authorization
from the Public Utilities Commission.
This bill would require the commission to require any gas
corporation that has entered into a specified settlement agreement
adopted by the commission, to put its historical gas gathering
system, as defined, to auction not later than April 30, 2002. The
bill would require the gas corporation to file a complete inventory
of specified assets not later than February 28, 2002. The bill would
require the commission to establish minimum terms and conditions
applicable to the auction. The bill would require that the terms and
conditions of any sale conducted pursuant to these provisions
between an eligible bidder, as defined, and a gas corporation, be
filed with the commission. Because a violation of the Public
Utilities Act and a violation of an order by the commission are
crimes under existing provisions of law, the bill would create a
state-mandated local program by expanding the definition of a crime.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 857 is added to the Public Utilities
Code The Legislature finds and declares that it is the
intent of the Legislature to encourage the increased production of
natural gas within the state. It is the further intent of the
Legislature to encourage the private ownership, maintenance, and
operation of natural gas pipelines operated for the sole purpose of
gathering natural gas from producing wells, as a means to facilitate
the increased production of natural gas production in the state.
SEC. 2. Chapter 2 (commencing with Section 3250) is added to Part
4 of Division 1 of the Public Utilities Code, to read:
CHAPTER 1. GAS PRODUCER ACQUISITION OF EASEMENT RIGHTS
Article 1. Definitions
3150. Unless the context otherwise requires, the definitions in
this article govern the construction of this chapter.
3151. "Person" means an individual, partnership, limited
liability company, or corporation, but does not include an
association, as defined in Section 3002.
3152. "Natural gas" means all gas produced in this state, natural
or manufactured, except propane, for light, heat, or power.
Article 2. Acquisition of Easement Rights
3155. A person involved in the production of natural gas may buy,
hold, and exercise all privileges of ownership of real or personal
property as may be necessary or convenient for the conduct and
operation of, or incidental to, transmission of natural gas. Without
limiting the foregoing, a person involved in the production of
natural gas may acquire a real property easement from a public
utility for the purpose of accommodating the person's gas plant, and
the easement shall be deemed to be held for a public purpose by the
person, provided that the commission finds that the use by the person
is in the public interest. , to read:
857. (a) The commission shall require any gas corporation that
has entered into a settlement agreement adopted by the commission in
Decision 97-08-055, to put its historical gas gathering system to
auction not later than April 30, 2002. For the purposes of this
section and Section 857.1, a "historical gas gathering system" means
any system listed on a utility's asset inventory and classified as a
gathering system prior to 1989.
(b) Not later than February 28, 2002, any gas corporation ordered
to put its historical gas gathering systems to auction pursuant to
subdivision (a), shall be required to file with the commission a
complete inventory of its historical gas gathering system. The
inventory shall include a report on the current condition and status
of all assets defined.
(1) This information shall be kept on file with both the utility
and the commission and made available to any interested party upon
request.
(2) Not later than 30 days from the date of enactment of this
section, the utility shall be required to develop and maintain a list
of all eligible bidders.
(c) Not later than 60 days from the date of submission of an
inventory pursuant to subdivision (b), the commission shall determine
which lines, if any, must be excluded from the auction for purposes
of maintaining gas service to existing customers. All other lines
shall be put to auction immediately following the 60-day period
provided in this section.
(d) Concurrent with the time periods provided in this section, the
commission shall establish minimum terms and conditions under which
each auction will be conducted prior to April 30, 2002.
(e) An "eligible bidder" under this section means:
(1) Any natural gas producer that has a direct production
interest, mineral interest, or is a mineral leasee in the field in
which the gathering system is located or serves.
(2) Any cooperative of producers that has a direct production
interest, mineral interest, or is a mineral leasee in the field in
which the gathering system is located or serves.
(f) Not later than seven days from the date the gas corporation
receives an initial bid from an eligible bidder for any section of a
gathering system pipeline, the gas corporation shall be required to
do all of the following:
(1) File a notice of the pending bid with the commission.
(2) Notify all eligible bidders recorded on file by mail of the
pending bid.
(g) All bidding processes conducted under this section shall be
kept open for a period of 60 calendar days commencing with the
receipt of an initial bid. The bidding process may not exceed a
period of 60 days unless otherwise agreed to jointly by the utility
and the party that submitted the initial bid. The gas corporation
shall consider all bids submitted by an eligible bidder.
(h) Upon expiration of the 60-day open bidding process, the
utility shall enter into a sales contract with the eligible bidder
that submitted the highest bid. All sales transactions conducted
pursuant to this section shall be completed and filed with the
commission not later than 21 days from the close of the open bidding
process.
(i) The terms and conditions of any sale conducted under this
section shall be filed with the commission.
(1) All terms and conditions of sale under this section shall be
deemed reasonable by the commission. The commission shall review all
transactions conducted under this section not later than 30 days
from the date the sale closed between the purchaser and the utility.
(2) All sales conducted under this section shall reflect the best
market value for the asset and be consistent with the terms and
conditions established under subdivision (d).
(3) All gathering systems sold pursuant to this section shall
include the transfer from the gas corporation to the purchaser of all
easements and rights-of-way associated with the gathering system
being sold.
(j) Under the terms and conditions of any sale conducted under
this section, the utility shall retain all historical environmental
liability associated with the line prior to its sale. Upon
completion of the sale, the purchaser shall assume all future
environmental liability. Environmental or hazardous conditions
resulting from the utility's historical ownership of the system and
requiring mitigation shall be funded through the utility's existing
hazardous waste fund.
(k) (1) All pipeline assets sold pursuant to this section shall be
governed by common carrier principles. Gathering system owners
shall be authorized to assess users rates on producers with
nonownership interests. All rates assessed under this section shall
be market-based and reflect the actual purchase cost of the line, as
well as the actual operational costs of the line.
(2) All transport rates entered into under this section shall be
filed with the commission.
(l) Gas corporations affected by this section may not be required
to offer for sale any eligible gathering system after December 31,
2003.
(1) Any eligible system that does not receive a bid on or before
December 31, 2002, shall remain the sole property of the gas
corporation in question.
(2) Any gas corporation affected by this act shall be authorized
to continue to maintain, operate, or retire any gathering system
remaining in its inventory after December 31, 2002, subject to all
applicable commission rules and regulations.
SEC. 2. Section 857.1 is added to the Public Utilities Code, to
read:
857.1. Gas corporations operating in California shall be required
to provide connections to their backbone system for any new proposed
gathering system seeking a connection. Requests for a connection
shall be filed with the commission, and reviewed and processed by the
gas corporation not later than 60 days from the date of receipt of
the request.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.