BILL ANALYSIS
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THIRD READING
Bill No: AB 1234
Author: Pescetti (R)
Amended: 8/7/02 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 5-0, 8/6/02
AYES: Bowen, Morrow, Alarcon, Dunn, Sher
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Production and transmission of public utility
commodities and services: natural gas
SOURCE : California Natural Gas Producers Association
DIGEST : This bill permits an individual natural gas
producer to acquire an easement from a public utility, as
specified.
ANALYSIS : 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 State Public Utilities Commission
CONTINUED
AB 1234
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(PUC) 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 Company (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.
PUC 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 PUC authorized rates which allowed PG&E to
amortize its investments in gathering lines in eight years.
In 1996, the PUC 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 PUC 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/14/02)
AB 1234
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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.
NC:kb 8/17/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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