BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1234 - Pescetti Hearing Date:
August 6, 2002 A
As Amended: June 19, 2002 FISCAL B
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DESCRIPTION
Under existing law , if an easement is held by a public utility
for a public purpose, abandonment of the public purpose for
which the easement was acquired terminates the easement, and it
reverts to the grantor.
Existing law (AB 313 (Thomson), Chapter 320, Statutes of 1997)
permits a cooperative association of natural gas producers to
acquire an easement from a public utility and provides the
easement shall be deemed to be held for a public purpose if the
California Public Utilities Commission (CPUC) finds the use is
in the public interest.
This bill permits an individual natural gas producer to acquire
an easement from a public utility and provides the easement
shall be deemed to be held for a public purpose if the CPUC
finds the use is in the public interest.
BACKGROUND
Pacific Gas & Electric (PG&E) currently owns the gathering lines
used to transport natural gas from the production wells in its
service area to PG&E's main gas transmission system. According
to PG&E, it has 530 miles of gathering lines currently in
operation. Over the course of developing its natural gas
delivery system, PG&E secured easements in the form of
rights-of-way to allow these gathering lines to cross others'
property. According to PG&E, none of these easements have been
acquired pursuant to eminent domain - all have been granted by
the property owners under varying terms and conditions.
CPUC decisions associated with the deregulation of the natural
gas industry have encouraged the divestiture of PG&E's gathering
lines. In its 1989 "Gas Gathering Decision," the CPUC
authorized rates which allowed PG&E to amortize its investments
in gathering lines in eight years. In 1996, the CPUC approved
the "Gas Accord" settlement between PG&E and gas producers,
which contemplated that PG&E's lines would be sold to the gas
producers who used them.
This bill allows a private gas producer purchasing a public
utility's gas facility to also acquire the underlying easement,
and allows the easement to retain its public purpose status if
the CPUC finds its use is in the public interest. Absent this
bill, many easements associated with a gathering line purchased
by a private gas producer would likely revert to the property
owner, thus requiring the gas producer to negotiate a new
easement with the property owner on terms less favorable to the
producer.
COMMENTS
Should property owners be notified? A private producer's
ability to acquire and hold an existing easement from a utility
relies on a determination from the CPUC that the use of the
easement by the private producer is in the public interest.
This is due to California case law establishing that, if an
easement is acquired by a public utility for a public purpose,
the abandonment of the public purpose (e.g. transfer to a
non-utility entity) terminates the easement, and the easement
itself reverts to the grantor. With a determination from the
CPUC that the use is in the public interest, the bill provides
the easement is held for a public purpose, which is intended to
allow it to be transferred without triggering a reversion to the
property owner.
While the property owner whose land the easement runs through
may wish to weigh in on the CPUC's decision, it's possible the
decision could be made without the property owner's knowledge.
The author and committee may wish to consider whether this bill
should include a requirement that affected property owners be
notified by the utility when it applies to the CPUC to sell a
gathering line.
ASSEMBLY VOTES
Assembly Floor (76-0)*
Assembly Appropriations Committee (19-0)*
Assembly Utilities and Commerce Committee
(15-0)*
*Prior, unrelated version of the bill.
POSITIONS
Sponsor:
California Natural Gas Producers Association
Support:
California Independent Petroleum Association
Carneros Energy, Inc.
Ivanhoe Energy (USA) Inc.
Pacific Gas and Electric Company
Rio Delta Resources, Inc.
Signal Hill Petroleum
Venoco, Inc.
Oppose:
None on file
Lawrence Lingbloom
AB 1234 Analysis
Hearing Date: August 6, 2002