Sandra Rosales. From: Sent: To: Cc: Subject: Attachments:

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1 Sandra Rosales From: Sent: To: Cc: Subject: Attachments: Beth Dorris Wednesday, April 22, :01 AM 'Mitchell G. Lansdell'; 'Yvonne Mallory'; 'lisa Heep'; 'Thompson, Jocelyn' RE: Gardena comments on WesPac pipeline franchise application and EIR CPUC decision requiring FEIR prior to public utility status decision for WesPac.pdf Greetings, Attached, as part of the comments and any associated administrative record, is a CPUC ruling requiring the final EIR for WesPac's application for public utility status. We are providing this in further response to statements made by applicant's counsel and others at the Board of Transportation Commissioners' hearing incorrectly claiming that Gardena would have full reign to prevent the pipeline from going through its streets, and that the actions proposed to be taken by the City of Los Angeles would play no role in impairing Gardena's ability to refuse installation of that pipeline. 1

2 TAS/VDR/pes/mto 11/25/08 F I LED :11 AM BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of WesPac Pipelines - Los Angeles LLC for an order granting it public utility status as a common carrier pipeline corporation and authorizing it to file a tariff with market-based rates for its jet fuel pipeline transportation services. Application (Filed April 3, 2007) SCOPING MEMO AND RULING OF ASSIGNED COMMISSIONER 1. Introduction Pursuant to Public Utilities Code section , subdivision (b), and Rule 7.3, subdivision (a), of the Commission's Rules of Practice and Procedure". this scoping memo and ruling identifies the procedural schedule and issues to be considered in this proceeding. 2. Background and Procedural History. WesPac Pipelines - Los Angeles LLC (WesPac) is a limited liability company organized under the laws of the State of Nevada, and is authorized to do business in California. It is owned by WesPac Pipelines LLC, a Nevada limited liability company. WesPac affiliates operate jet fuel pipelines in several states, although its sole California affiliate is a proprietary (i.e., non-common carrier) jet fuel pipeline in San Diego. 1 The full text of the Public Utilities Code and the Commission's Rules of Practice and Procedure are available oil the Commission's website at

3 A TAS/VDR/ pes/ mto WesPac filed this application on April 3, 2007, asking the Commission for interim and final authority in connection with its plans to construct a 24-inch jet fuel pipeline to serve airline companies at Los Angeles International Airport (LAX). Specifically, WesPac asked the Commission to issue an initial interim order to establish that, as a common carrier pipeline corporation, it is a public utility, and then to issue a final order authorizing it to file a tariff with the Commission for market-based rates for its transportation services. WesPac suggests that the procedure followed by the Commission in Application of Wickland Pipelines LLC for Authorization to Increase Membership Contributions and for Approval of Rates and Conditions of Service, Application (A.) , is the appropriate model for addressing similar issues in this proceeding. The City of Gardena filed a protest challenging, inter alia, WesPac's contention that it should be accorded common carrier status, but subsequently withdrew its protest. No other protests were filed. Consequently, the application is now unopposed. We granted WesPac's request for a declaration that it is a public utility in Decision (D.) ,which was issued July 12, 2007, and we now turn to the second and final aspect of WesPac's application. A prehearing conference (PHC) was held on October 8, 2008, before the assigned Administrative Law Judge (ALJ) to identify the issues and set a procedu.ral schedule. The following details concerning the proceeding were discussed at that time. 3. Current Status WesPac's proposed pipeline in Los Angeles County will serve the Los Angeles International Airport Airline Consortium (LAXFUEL)and its member airlines operating at LAX. The pipeline is not yet under construction, because -2-

4 the project is currently undergoing environmental review pursuant to the California Environmental Quality Act (CEQA), Public Resources Code section et seq. The City of Los Angeles (City) is the lead agency conducting the environmental review, and this Commission is participating as a responsible agency. As a responsible agency under CEQA, the Commission must review the environmental documents and Final Environmental Impact Report produced by the City, and make findings to the extent required by our role in the project. We will also review the City's conclusions to confirm that they comply with CEQA, and determine whether those conclusions are adequate for our decision-making purposes. (See Cal. Code Regs., tit 14, ) WesPac is also negotiating franchise agreements with the City, the County of Los Angeles, and the City of Carson for the use of public rights-of-way to construct the pipeline. Construction of the pipeline may not commence until both of these pending tasks are completed. WesPac anticipates that the Final Environmental Impact Report (FEIR)will be finalized and certified by the end of this year. WesPac also anticipates that it will finalize franchise the agreements with the City and the County of Los Angeles before the end of this year, and with the City of Carson in the early part of At the conclusion of the PHC, WesPac agreed to inform the Commission when the FEIR has been certified and the time for judicially challenging that document has passed, and when it seeks to file its tariff with market-based rates. 4. Scope of the Proceeding As it is now postured, this proceeding only involves the adoption and implementation of WesPac's market-based rates. The Commission has authority to establish rates and conditions of service for fuel pipelines under its jurisdiction, and recently exercised that authority in issuing its final order in the -3-

5 Wickland proceeding, supra, D (November 7, 2002), -- Cal.P.D.C 3 rd --. Although that decision does not articulate the principles that govern the establishment of market-based rates, it approved such rates on the basis that it was unlikely that the applicant would be able to exercise market power. (Id., Conclusion of Law 4, mimeo p.20.) D , the Order Denying Rehearing of D in City of Long Beach v. Unocal Pipeline Company (1996),66 Cal.P.D.C.2d 28, is somewhat more. instructive. That decision approved the applicant's market-based tariff rates on the basis that those rates were "just and reasonable. II The Commission made this determination as the response to a question of fact, and evaluated II reasonableness" by using its" independent judgment in light of the circumstances relevant to particular utilities[]." (Id.!.31 (footnote omitted». The facts considered by the Commission in Unocal were essentially those relating to the existence of practical alternatives to particular services offered by the applicant! such that the initial rates were subject to market discipline. The facts considered by the Commission included 1/ (1) [applicant's] principal customers are sophisticated oil producers; (2) [applicant's} oil pipelines face potential competition from new pipelines; (3) [applicant's] customers have reasonable alternatives such as shipment by truck! vessel, or proprietary pipelines; (4) [applicant's] proposed rates compare favorably to other pipeline rates; and (6) [sic] even assuming cost-of service [traditional rate analysis] methods, [applicant's] proposed rates provide for an acceptable rate of return... /I Id. Although the factual context of the present proceeding differs from that of Unocal, we expect the scope of this proceeding to encompass factual issues of a similar nature. Our task! therefore, will be to determine whether WesPac's proposed rates are just and reasonable because they will be subjected to -4-

6 competitive discipline as a practical matter. Inasmuch as there is nothing in the record at this time to identify the specific competitive factors that will affect WesPac's service, I will not attempt to enumerate those issues in detail here. We will have to make findings and conclusions under CEQA in the final decision, as I have already outlined above. The Commission may grant authority to adopt rates subject to a time limitation to exercise that authority, and we will have to consider whether to place such a limitation on any authority we grant to implement rates in this proceeding. 5, Assignment of Proceeding Commissioner Timothy Alan Simon is the assigned Commissioner, and Administrative Law Judge Ryerson is the assigned ALJ and the presiding officer in this proceeding. 6. Categorization of Proceeding and Need for Hearing This matter was preliminarily categorized as a ratesetting proceeding. That categorization has been confirmed. No hearing is necessary. 7, Procedural Schedule Based upon the outcome of the PHC, the schedule for concluding this proceeding will be dictated by when we receive notice from WesPac that the remaining issues are ready for decision. In response to WesPac's - 5 -

7 representations, I anticipate that this matter will be fully resolved by December 31,2009, barring delay caused by litigation concerning the PEIR. We must defer setting interim procedural deadlines until we receive notice from WesPac. IT IS SO RULED. Dated November 25, 2008, at San Francisco, California. /s/ TIMOTHY A. SIMON Timothy Alan Simon Assigned Commissioner

8 INFORMATION REGARDING SERVICE I have provided notification of filing to the electronic mail addresses on the attached service list. Upon confirmation of this document's acceptance for filing, I will cause a Notice of Availability of the filed document to be served upon the service list to this proceeding by u.s. mail. The service list I will use to serve the Notice of Availability of the filed document is current as of today' 5 date. Dated November 25,2008, at San Francisco, California. /5/ MICHAELJ. OLIVEROS Michael J. Oliveros

9 ************ SERVICE LIST *********** Last Updated on 2S-NOV-2008 by: JVG A LIST *"*,,*****,,.,,**". PARTIES *******"****** Paul S. Phillips Executive Division Fernando Avila RM.S306 EDWARD W. LEE, KENDALL H. MACVEY BEST BEST & KRIEGER, LLP 3750 UNIVERSITY AVENUE San Francisco CA (415) POBOX 1028 RIVERSIDE CA (951) Victor D. Ryerson For: the City of Gardena Administrative Law Judge Division Kendall H. Macvey, Esq. EDWARD W. LEE, FERNANDO AVILA BEST, BEST & KRIEGER, LLP 3750 UNIVERSITY AVENUE, SUITE 300 RIVERSIDE CA (951) kendall.macveyfsbbklaw.com For: the City of Gardena RM.5044 San Francisco CA (415) Patrick Smith Executive Division San Francisco CA Jose E. Guzman, J1". Attorney At Law NOSSAMAN,GUTHNER,KNOX & ELLIOT LLP 50 CALIFORNIA STREET, 34TH FLOOR SAN FRANCISCO CA (415) For: WesPac Pipelines-Los Angeles LLC Paul Wuerstle 3 Consumer Protection & Safety Division RM.2107 San Francisco CA (415) 703-2U~3 pwu@cpuc.ca.gov..******** INFORMATION ONLY ******,.***,.********". STATE EMPLOYEE *******,.*** Renee G. Anderson SuongT. Le Consumer Protection & Safety Division AREA2-C San Francisco CA (415) sti@cpllc.ca.gov 1048 WEST 133RD STREET GARDENA CA (310) andersonrg@socal.rr.com Deana Keller 3313 N. MAPLE AVENUE, 106 FRESNO CA Vahak Petrossian Consumer Protection & Safety Division RM WEST 4TH STREET SUITE 500 Los Angeles CA (213) vap@cpuc.ca.gov Ronald Broberg President TRUCKING SUPPORT SERVICES TEAM PO BOX 1608 PLACERVILLE CA (END OF SERVICE LIST)