BILL ANALYSIS AB 1234 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1234 (Pescetti) As Amended August 7, 2002 Majority vote ---------------------------------------------------------------------- |ASSEMBLY: |78-0 |(August 29, |SENATE: |39-0 |(August 27, 2002) | | | |2002) | | | | ---------------------------------------------------------------------- ------------------------------------------------------------------------ |COMMITTEE VOTE: |12-0 |(August 29, 2002) |RECOMMENDATION: |Concur | | | | | | | ------------------------------------------------------------------------ Original Committee Reference: U. & C. SUMMARY : Permits an individual natural gas producer to acquire an easement from a public utility. The Senate Amendments 1)Permit an individual natural gas producer to acquire an easement from a public utility. 2)Provide the easement shall be deemed to be held for a public purpose if the Public Utilities Commission (PUC) finds the use is in the public interest. 3)Require a public utility, within 10 days after applying to PUC for an order authorizing the transfer of an easement, to provide written notification of the application and of PUC's pending review to each owner of real property affected by the easement. EXISTING LAW : 1)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 PUC finds the use is in the public interest. 2)Provides that easements held for public purposes revert to the AB 1234 Page 2 grantor if the public purpose is abandoned. AS PASSED BY THE ASSEMBLY , this bill required any gas corporation that has entered into a specified settlement before the PUC to put its historical gas gathering system to auction not later than April 30, 2002. FISCAL EFFECT : Unknown COMMENTS : This bill was substantially amended in the Senate and the Assembly-approved provisions of this bill were deleted. The amended bill is inconsistent with Assembly actions on the bill. 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 the property of others. According to PG&E, none of these easements were acquired using eminent domain; all were 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 a 1989 decision, PUC authorized rates that allowed PG&E to amortize its investments in gathering lines in eight years. In 1996, PUC approved a 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. AB 1234 Page 3 Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083 FN: 0007894