BILL ANALYSIS
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THIRD READING
Bill No: AB 1350
Author: Canciamilla (D)
Amended: 4/16/02 in Senate
Vote: 27 - Urgency
SENATE ENERGY, U.&C. COMMITTEE : 5-1, 4/9/02
AYES: Morrow, Alarcon, Battin, Murray, Vincent
NOES: Bowen
SENATE JUDICIARY COMMITTEE : 6-0, 4/23/02
AYES: Escutia, Ackerman, Haynes, Kuehl, Peace, Sher
ASSEMBLY FLOOR : Not relevant
SUBJECT : Gas corporations: condemnation
SOURCE : Wild Goose Storage, Inc.
DIGEST : This bill exempts a natural gas storage company,
Wild Goose Storage Inc., from a recent law requiring an
additional hearing before the State Public Utilities
Commission for expansion of its storage facilities. A
similar exemption was provided to another company, Lodi Gas
Storage, last year.
ANALYSIS : Existing law provides that public and private
companies that sell gas, electricity, or water to the
public are subject to the regulatory authority of the State
Public Utilities Commission (PUC) and are authorized to
exercise the power of eminent domain.
CONTINUED
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Existing law provides that property may be acquired by
eminent domain for a particular project only when (1) a
public interest and necessity require the project, (2) the
project is planned or located in the manner most compatible
with the greatest public good and the least private injury,
and (3) the property sought to be acquired is necessary to
the project.
Existing law further provides that a company seeking to
construct or expand a pipeline or facility must obtain a
Certificate of Public Convenience and Necessity (CPCN) for
the project from the PUC.
Existing law further provides that a company offering
competitive services may not condemn property for the
purposes of competing with another company unless it
obtains a finding by the PUC that the project is necessary,
is in the public interest, and is compatible with the
greatest public good and the least public harm. This
requirement is in addition to any other statutory review
requirement, including the public utility's obligation to
obtain a CPCN for the project from the PUC. [Pub. Util.
Code Sec. 625.]
Existing law further provides that Section 625 does not
apply to proposed condemnations by gas or electric
companies when the PUC has issued a CPCN for the project
[AB 21XX (Canciamilla, Ch. 14, Stats. of 2001).]
Existing law further provides that, notwithstanding Section
625, a gas company may exercise the power of eminent domain
"to condemn any property for the purpose of competing with
another entity in the offering of natural gas and services
related to natural gas," from the effective date of this
section to June 1, 2002. [SB 28X (Sher, Ch. 13, Stats. of
2001)(effective May 22, 2001).]
This bill restates the exemption set forth in SB 28X,
further limiting it to apply only as to property "for which
the gas corporation public utility has filed a complaint in
eminent domain in superior court on or before October 31,
2002."
This bill further provides that the exemption will become
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inoperative on October 31, 2002, and repealed as of April
1, 2003.
Background
Gas storage facilities are primarily naturally occurring
underground structures. They allow customers more
flexibility in gas purchasing and increase the capacity of
the natural gas infrastructure in the state. Both the PUC
and the California Energy Commission (CEC) have found that
gas storage facilities contribute to price stability and
supply adequacy.
Gas storage facilities fall under the regulatory
jurisdiction of the PUC. The PUC licenses the operation of
gas storage facilities, but it does not regulate rates and
charges. The gas storage facilities can be part of the
regulated utility or independently owned.
Stated Need for Legislation
The sponsor, Wild Goose Storage, Inc., is a privately owned
natural gas storage company affiliated with Alberta Energy
Company, the largest independent natural gas storage
operator in North America. Wild Goose is licensed and
regulated by the PUC, which may (but currently does not)
set the rates Wild Goose charges its customers.
Wild Goose built and operates the first independent natural
gas storage facility in California, and currently is
applying for a CPCN to expand its underground storage area.
The facility is located in the City of Gridley in Butte
County, in a wetland area under a rice field that serves as
a wild fowl sanctuary during the winter. Due to weather,
rice planting, and bird migration timetables, the window
for any construction or expansion at the facility is only a
little over two months long, from mid-June to late August.
The Regulatory Review Process
When a gas, electric or water company seeks to build or
expand a facility, such as Wild Goose's gas storage
project, it must undergo a substantive "public convenience
and necessity" review by the PUC. If the review is
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positive, a CPCN is issued for the project. [Pub. Util.
Code Sec. 1001.] If the project will involve the
condemnation of property, it also is subject to the
three-step eminent domain review process set forth in CCP
Section 1240.030.
In 1999, the Legislature passed SB 177 (Peace), codified as
Section 625 of the Public Utilities Code, which required
companies other than the regulated monopolies to undergo an
additional review process with the PUC before they could
condemn property for a new or expanded project. This
requirement was in addition to the existing requirement
that the company obtain a CPCN for the project from the
PUC.
Last year, Wild Goose sponsored AB 21XX (Canciamilla),
which added Section 625.5 to the Public Utilities Code,
clarifying that Section 625 does not apply to a
condemnation by a gas or electric company when the PUC
already has issued a CPCN for the project, or for the
expansion of a project for which a CPCN already has been
granted. However, as Wild Goose is seeking its CPCN
simultaneously with its eminent domain action in order to
be ready for the June-August construction period, the new
Section 625.5 will not exempt Wild Goose from the Section
625 requirement as it attempts to proceed with expansion
this year.
Wild Goose Seeks an Exemption From Section 625
As Wild Goose pursued AB 21XX last year, another private
gas storage company, Lodi Gas Storage, obtained a direct
exemption from the additional requirements of Section 625
through SB 28X (Sher, Ch. 14, Stats. of 2001). That
exemption expires on June 1, 2002.
Due to the unique time constraints on Wild Goose's
underground gas storage expansion project, however, it will
not be able to begin expansion of its facility until at
least mid-June and it must be completed by the end of
August. Accordingly, this bill would restate the exemption
language of SB 28X, extending its expiration date to
October 31, 2002, and further would narrow the exemption to
apply only to utilities that have filed a complaint in
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eminent domain on or before October 31, 2002.
This bill takes effect immediately as an urgency statute.
If it passes,Wild Goose believes it could begin
condemnation proceedings as soon as the PUC approves its
application to expand its storage facility (which the
company expects to occur in June). Without this bill,
Wild Goose believes it will not be able to expand its
facility until 2004.
Local Government Bodies and Facility Neighbors Favor the
Proposed Expansion
Wild Goose has supplied a copy of resolutions in support of
the expansion of the facility adopted last year by the
Boards of Supervisors of Butte County (where the Wild Goose
facility is located) and Colusa County (into which the
expanded facility will extend). Similar letters of support
have been received from the Gridley City Council, the
area's Assembly Member, State Senator, and Member of
Congress, local waterfowl and hunting clubs, and neighbors
of the Wild Goose facility.
The Affected Property Owner Opposes the Bill
The affected property owner in this case is Roseville Land
Development Association (RLDA). Wild Goose condemned a
one-mile easement through RLDA property for its initial
storage facility, and seeks additional easements for its
planned expansion.
According to its attorney, RDLA objects to the right of a
private company like Wild Goose to condemn property under
any circumstances, and believes that this bill's proposed
removal of the Section 625 requirement for an additional
PUC hearing would give Wild Goose an undeserved advantage.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/25/02)
Wild Goose Storage, Inc. (source)
Butte County Board of Supervisors
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Colusa County Board of Supervisors
Gridley City Council
Hangtown Duck Club
Butte Sink Waterfowl Association, Inc.
California Waterfowl Association
Sprig Meadows Club
Henry F. Trione (neighbor of the facility)
OPPOSITION : (Verified 4/25/02)
Dennis DeCuir (attorney for RLDA)
NC:cm 5/1/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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