2. Background

PPS (the Pipeline) and PT (the Terminal) share a common but extremely complex ownership structure, and these two applications seek to transfer ultimate control of both companies to a new parent company, LB Pacific, as a result of several transactions. Pipeline and Terminal are affiliates. For administrative ease, LB Pacific and PPS Holding together filed motions with PPS and PT respectively to consolidate the two applications. The applications are virtually identical in scope and seek virtually identical outcomes.

a. The Pipeline - PPS

PPS is a Delaware limited liability company authorized to do business in the State of California. Its principal place of business is 5900 Cherry Avenue, Long Beach, CA, 90805-4408. PPS is a public utility subject to the Commission's jurisdiction pursuant to the provisions of § 216 and § 228.

PPS owns and operates two separate common carrier crude oil pipeline systems. Both systems are pipelines as defined in § 227. The first system, Line 2000 or the Pacific System, transports crude oil produced in the San Joaquin Valley (SJV) and California Outer-Continental Shelf (OCS) to refineries and terminal facilities in the Los Angeles Basin. Line 2000, which began operation in 1999, is a 130 mile, 20-inch insulated trunk pipeline originating at the Emidio Pump Station in Kern County. Line 2000 delivers crude oil directly and indirectly to refineries and terminal facilities in the Los Angeles Basin. Line 2000's permitted annual throughput capacity is 130,000 barrels per day. Line 2000 currently transports SJV heavy crude oil, California OCS crude oil and mid-barrel crude oil.

The second system that is owned and operated by PPS is the Line 63 System. The Line 63 System transports OCS crude oil and multiple grades of SJV light crude oil to refineries and terminal facilities in the Los Angeles Basin and in Bakersfield, but does not transport heavy crude oil. The Line 63 System consists of a 107-mile trunk pipeline, originating at the Kelly Pump Station in Kern County and terminating at the West Hynes Station in Long Beach. The Line 63 System includes 60 miles of distribution pipelines in the Los Angeles Basin and the Bakersfield area, 156 miles of gathering pipelines in the San Joaquin Valley, and 22 storage tanks with approximately 1.2 million barrels of storage capacity. These storage assets, the majority of which are located in the San Joaquin Valley, are used primarily to facilitate the transportation of the crude oil on the Line 63 System.

b. The Terminal - PT

PT is also a Delaware limited liability company authorized to do business in the State of California. Its principal place of business is also 5900 Cherry Avenue, Long Beach, CA, 90805-4408. PT is a public utility subject to the Commission's jurisdiction pursuant to the provisions of § 216 and § 228.

PT owns and operates certain oil pipeline and storage facilities in Southern California that were originally built by Southern California Edison Company (Edison) to supply its electric generation stations. PT acquired the facilities from Edison in 2003. The facilities consist of 120 miles of pipeline (75 miles of which are active), with connections to a marine berth at the Port of Long Beach and to Los Angeles area refineries; oil storage tanks totaling 9.4 million barrels of nominal capacity, and eleven pumping and heating stations. PT provides oil storage and transportation services to third party users pursuant to the terms of a Commission approved tariff which allows for negotiated contracts between PT and its customers. The Commission approved PT's acquisition and operation of the facilities in Decision (D.) 03-07-031.

c. Current Owners of PPS and PT

Both PPS and PT are owned 100% by Pacific Energy Group LLC (PEG), a Delaware limited liability company that is in turn owned 100% by Pacific Energy Partners, L.P. (Pacific Partners), a Delaware limited partnership. The ownership of Pacific Partners is comprised of a 2% general partnership interest that is held by Pacific Energy GP, Inc. (Pacific GP), a Delaware corporation, and a 98% limited partnership interest that is represented by common and subordinated units, with the subordinated units representing 34.7% of the ownership of Pacific Partners and the common units, which are publicly owned and traded on the New York Stock Exchange, representing the remaining 65.3% of Pacific Partners. The principal place of business for Pacific Partners, Pacific GP and PEG is also 5900 Cherry Avenue, Long Beach, CA 90805-4408, along with the utilities PPS and PT.

d. PPS Holding's Current Role

PPS Holding (the Seller) owns 100% of Pacific GP, the sole general partner of Pacific Partners. PPS Holding is in its turn owned 100% by The Anschutz Corporation (TAC), a Kansas Corporation headquartered in Denver, Colorado. TAC is also the owner of 10,465,000 outstanding subordinated units, which represent the entire 34.7% subordinated limited partner interest in Pacific Partners described above.