4. Parties' Positions

This section briefly summarizes the position of those parties who participated in the evidentiary hearings on the non-environmental portion of the case. This section sometimes touches upon the parties' positions on the environmental issues raised in the EIR, although those issues are discussed in greater detail in the EIR. This section is a summary, and parties' specific arguments are raised, as appropriate, throughout the discussion in this decision.

LGS states that it has met every condition stated by the Commission to receive a CPCN as an independent storage provider. LGS is the second member of the gas storage community to apply to the Commission to be a competitive gas storage provider. LGS believes that its application furthers the Legislature's goal of facilitating a competitive gas storage market in California, and that under the Commission's "let the market decide" policy, it is appropriate to dispense with the traditional CPCN need review because the risk of the project falls entirely on the project's investors. Although LGS does not believe a need showing is appropriate for this application, if it is, LGS states that it has met that showing.

LGS believes that it has also addressed community concerns as a good neighbor regarding the project by agreeing to various mitigation measures, such as changing the pipeline route and compressor station location, spending $60,000 on air quality mitigation equipment for the compressor station, and agreeing to bury the pipeline a minimum of four feet (as opposed to three feet required by federal regulation) or deeper, if agreed to with affected landowners, so as not to disrupt agricultural practices. LGS states that its project design and pipe placement addresses safety concerns.

LGS believes that most of the opposition to the project is in reference to short-, and not long-term impacts of the project, because only a limited number of acres (less than 15) will be permanently impacted and taken out of production.

LGS repeatedly states its commitment to compensate landowners through whose property the project must go for the losses associated with the project. That includes the market value of easements or storage rights, the market value of lost crops, both present and future, and the costs of planting and replanting crops. LGS states its preference to do so through individual negotiations.

Some parties raise indemnity questions, such as who will indemnify them in the event of an accident caused by the project. LGS believes that it has ample liability insurance, and has committed to carrying $1 million general liability insurance, with an excess liability policy of $20 to $25 million per occurrence. LGS states that as of June 1999, its current assets were $100,000, but that it anticipates having $30 to $40 million in equity upon the project's completion. Finally, LGS believes that there is no need for the Commission to condition its certificate.

Calpine concurs in the need for this project. Calpine states that because LGS will only be the second independent member of the gas storage community, it will provide an important role in forcing all storage providers to be responsive to market forces. Calpine maintains that the Commission should approve this application because it will improve competition in gas storage facilities and because LGS has met all of the conditions set out by the Commission for approval.

LGS, PG&E, and Wild Goose presented testimony on various interconnection issues such as how LGS' facilities will initially be connected with PG&E's system, and whether interconnection can be accomplished without interfering with existing service. Other issues include whether the Commission should require LGS, as it did Wild Goose, to: (1) provide the Director of the Commission's ED the final total cost of the interconnection, including the share of the cost paid by each entity and (2) to enter into an operating and balancing agreement with PG&E before gas, including cushion gas, flows to the LGS facility on the PG&E system. During hearings, the parties largely resolved these issues. PG&E states that its support for the application is conditioned on the Commission adopting its position on the above issues.

The most hotly contested issues include those raised by landowners and community members. The Farm Bureau, Pacific Realty, and the Williams oppose the project on various grounds, although Pacific Realty has subsequently reached agreement with LGS, and its prior testimony is supplemented to reflect this outcome. The Williams are the only party to contest need.

The Farm Bureau believes that the project significantly impacts the criteria set out in Pub. Util. Code § 1002, namely, community, recreational, historical, and aesthetic values. The Farm Bureau is concerned with the project's impact on the winegrape growing industry. The Farm Bureau also believes that the burden or risk of this project not only falls on LGS' investors, but also on the local landowners and their community. These include, but are not limited to, many environmental concerns discussed in detail in the EIR such as the project's impact on winegrape agricultural practices, residents' homes and businesses. The Farm Bureau is concerned with impacts such as gas odors, noise, visual blight, reduced tourism, and short- and long-term agricultural production, to name a few.

The Farm Bureau is also concerned that the local landowners will also bear the risk of the project economically, environmentally, and aesthetically. If the Commission approves the project, the Farm Bureau raises various mitigation measures which it believes the Commission should impose on LGS. The Farm Bureau, Pacific Realty, and the Williams believe that the Commission should require LGS to use public rights-of-way, to the extent possible.

Prior to resolving its differences with LGS, Pacific Realty supported a pipeline which maximized the public rights-of-way rather than running through agricultural land, notwithstanding the fact that CalTrans would not consider installing the pipeline along Highway 12, citing to Streets and Highway Code § 661 [in the event of a conflict between CalTrans and the Commission, the powers and duties vested in the Commission shall prevail.] Pacific Realty did not believe that LGS had adequately planned for the pipeline installation, for instance, in areas of soil subsidence. Pacific Realty was concerned with the efficacy of individual negotiations to resolve pipeline easement and placement issues, because if negotiations failed (and this application is granted) LGS would have the power of eminent domain.

Pacific Realty was also concerned with abandonment issues, the economic impact of the pipeline on its future farming operations, and any increased occupational safety liability which may result. Pacific Realty, as well as the Williams and the Farm Bureau, raised indemnity issues. These parties requested that the Commission require LGS to obtain bonds and/or greater liability insurance than LGS has proposed.

In addition to questioning the need for the project, the Williams also echo many of the concerns of the Farm Bureau and Pacific Realty. The Williams also believe that the project is contrary to Pub. Util. Code § 1002, in that, inter alia, it will substantially decrease the value and desirability of living in the largely rural residential area because of the actual and perceived safety and other environmental risks created by it. The Williams discuss some of these risks, such as the location of the compressor facility near the airport, in greater detail. Citing to testimony offered by their appraiser expert witness, the Williams argue that this perceived and actual risk will cause a substantial decrease in their property values.

The Williams point out that LGS proposes to locate the project in a rural residential area made up of single family homes and small ranch sites. An elementary school and at least 190 homes are within a one and one-half mile radius of the proposed compressor facility. The Williams also suggested necessary mitigation measures in the event the Commission approves this project.

The Farm Bureau, Pacific Realty, and the Williams are also concerned with the unequal bargaining position landowners have with LGS concerning land acquisition because LGS will have the power of eminent domain if the Commission approves this project. This issue was also raised repeatedly in the public participation hearings. LGS states it is committed to bargaining fairly with landowners, and has not used eminent domain in its past projects. If this application is approved, LGS plans to condemn property necessary for its project only as a last resort.

District Council 36's reply brief states that the Commission should not determine the necessity for further hearings until after the Draft EIR issues and the parties have had the opportunity to identify any unresolved issues. The Farm Bureau concurs.

Finally several parties contest how SB 177 should apply to LGS. The parties' positions on this issue are set out in the discussion addressing SB 177.