2. Procedural Background

This proceeding concerns the 265-mile-long 20-inch heated oil pipeline running from the San Joaquin Valley to the Bay Area (the 20" Pipeline). On December 5, 2005, Chevron Products Company (Chevron) filed this complaint against Shell Trading (US) Company (Shell Trading) and Equilon Enterprises LLC, doing business as Shell Oil Products US (Equilon), which is the owner of the 20" Pipeline. The complaint accuses Equilon and Shell Trading of operating the 20" Pipeline as a public utility and argues that the pipeline should be subject to Commission rate regulation. Tesoro Refining and Marketing Company (Tesoro) intervened seeking the same relief and raising the same allegations.

A prehearing conference was conducted on March 21, 2006, at which time Administrative Law Judge (ALJ) Glen Walker proposed bifurcating the proceeding into two parts: first, determining whether the 20" Pipeline is or is not a public utility; second, if the pipeline is deemed a public utility, conducting an appropriate ratesetting proceeding. A Scoping Memo memorializing this procedure was issued by the Assigned Commissioner on March 28, 2006.

On March 30, 2006, Equilon and Shell Trading filed a Motion to Temporarily Stay Discovery Pending Dispositive Motion and Request for Expedited Treatment. The motion was granted by ALJ Walker based on defendants' representation that a motion to dismiss, to be filed no later than April 6, 2006, could resolve the complaint. The motion to dismiss was filed on April 5, 2006, and responses to the motion were filed on April 25, 2006. Chevron on April 20, 2006, filed a motion for summary adjudication on its behalf. Defendants filed an opposition to that motion on May 5, 2006 including as a part thereof a motion for summary adjudication on their behalf.

ALJ Walker granted requests by the moving parties to file replies to the motion to dismiss.

On June 13, 2006, the draft decision of ALJ Walker was mailed to the parties. ALJ Walker's draft decision dismissed the complaint. He found that Chevron was estopped from asserting the invalidity of the buy/sell agreements by an unpublished 1994 Court of Appeals opinion holding that the 20" Pipeline was not dedicated to public use. In 1994, Chevron was a part-owner of the 20" Pipeline. In the litigation that preceded the 1994 decision, Chevron took the position that the pipeline was not dedicated to public use.

Shortly after issuing the draft opinion and before considering comments from the parties, ALJ Walker retired. The case was then re-assigned to ALJ Bemesderfer and ALJ Walker's draft opinion was withdrawn. Although ALJ Walker had denied an earlier request by Chevron for oral argument, on December 19, 2006 Chevron renewed that request, asserting that its due process rights would be jeopardized by a ruling on the cross-motions for summary adjudication without an oral argument. On January 10, 2007, assigned Commissioner Michael Peevey granted Chevron's renewed request. Thereafter, a prehearing conference was held on March 12, 2007 and oral argument was held before the assigned Commissioner and the assigned ALJ on March 13, 2007.