BILL ANALYSIS
AB 1350
Page A
Date of Hearing: May 6, 2002
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
AB 1350 (Canciamilla) - As Amended: April 16, 2002
SUBJECT : Gas corporations: condemnation.
SUMMARY : Allows a competitive natural gas storage company to
exercise the power of eminent domain to condemn property without
the need to obtain a separate finding from the California Public
Utilities Commission (PUC) that the action would serve the
public interest. Specifically, this bill :
1)Authorizes a gas corporation to acquire property by eminent
domain to compete with another entity, but only as to such
property for which the gas corporation has filed a complaint
in eminent domain in superior court on or before October 31,
2002.
2)Allows a gas corporation to bring the eminent domain action
notwithstanding existing laws requiring a separate finding by
the Public Utilities Commission that the action is in the
public interest.
3)Makes this bill inoperative on October 31, 2002, and repeal it
as of April 1, 2003.
4)Adds an urgency clause.
EXISTING LAW :
1)Permits a gas corporation to condemn any property necessary
for the construction and maintenance of its gas plant.
2)Prohibits certain public utilities that offer competitive
services from condemning property for the purpose of competing
with another entity, unless PUC finds that the action would
serve the public interest.
3)Provides that, until June 1, 2002, a gas company may exercise
the power of eminent domain to condemn property for the
purpose of competing with another entity in the offering of
natural gas and related services, notwithstanding any law to
the contrary.
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4)Provides that no gas corporation shall begin the construction
or expansion of a line or plant without first obtaining from
PUC a certificate that the public convenience and necessity
(CPCN) requires it.
FISCAL EFFECT : Unknown.
COMMENTS :
This bill is before the Committee upon its return from the
Senate pursuant to Assembly Rules because it was substantially
amended in the Senate, and the Assembly-approved provisions of
this bill were deleted.
This bill exempts Wild Goose Storage Inc., from a law requiring
a separate hearing before the PUC for expansion of its storage
facilities. A similar exemption was provided to another
company, Lodi Gas Storage, last year.
The regulatory process
When a gas, electric or water company seeks to build or expand a
facility, such as Wild Goose's gas storage project, PUC reviews
the proposal to determine if the "public convenience and
necessity" requires it. If PUC issues a CPCN, but the project
involves condemnation of property, the person seeking to
exercise eminent domain power must establish public interest,
necessity, and that the project will be completed with the least
public injury and the greatest public good.
In 1999, the Legislature passed SB 177 (Peace), codified as
Public Utilities Code 625, which requires companies, other
than the regulated monopolies, to establish essentially the same
necessity and public interest to PUC before they can condemn
property for a new or expanded project.
Last year, Wild Goose sponsored AB X2 21 (Canciamilla), which
added Public Utilities Code 625.5, clarifying that the Section
625 proceeding does not apply to a condemnation by a gas or
electric company when 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, Wild Goose is seeking its CPCN simultaneously with its
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eminent domain action so it can be ready for a shortened
June-August construction period. Thus, the new Section 625.5
will not exempt Wild Goose from the Section 625 review as it
attempts to proceed with expansion this year.
Purpose of this bill
As Wild Goose pursued AB X2 21 last year, another private gas
storage company, Lodi Gas Storage, obtained a direct exemption
from the additional requirements of Section 625 by enactment of
SB X1 28 (Sher).<1> That exemption expires on June 1, 2002.
Due to the time constraints<2> 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 X1 28, 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 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 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.
REGISTERED SUPPORT / OPPOSITION :
Support
Wild Goose Storage, Inc.
Opposition
None on file.
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<1> Chap. 14, Stats. 2001
<2> The facility is located in the Butte County city of Gridley,
in a wetland area, under a rice field that serves as a waterfowl
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.
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Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083