X. Comments on Proposed Decision
On November 19, 2001, the principal hearing officer's proposed decision was filed with the Commission and served on the parties in accordance with Section 311(d) of the Public Utilities Code and Rule 77.1 of the Commission's Rules of Practice and Procedure.
1. Over 80 years ago, SP constructed, operated, and maintained a water system for the purpose of supplying water for steam locomotives and railroad facilities. A pipeline carried water from Tehachapi to Keene and Caliente.
2. In the 1960's, SP's need for water substantially diminished with the retirement of steam locomotives.
3. Starting in the 1990's, and continuing to the present time, the Keene Water System was and is not primarily used by SP or Union Pacific for their own domestic or industrial purposes or for the irrigation of lands owned by SP or Union Pacific.
4. In 1994, SP abandoned the pipeline from Tehachapi to Keene.
5. In 1994, SP drilled new water supply wells in Keene.
6. In 1996, SP applied for a nonexclusive franchise to build a water pipeline for community use.
7. Union Pacific (after merging with SP) performed substantial repairs to the water system in 1997, at a time when the system was no longer used in railroad operations.
8. Most current residents purchased their homes believing the railroad would continue to supply water to the community.
9. The operating expenses proposed by Union Pacific for the Keene Water System are 264% greater than the average operating expenses for 3 Class D (under 500 connections) water utilities for which the Commission recently adopted rates.
10. Customers of the Keene Water System pay $4 per 1,000 gallons of water used.
11. The information ORA presented at hearing is too preliminary to establish rates given the magnitude of the rate increase proposed by Union Pacific.
12. The testimony of Stonybrook contains legal argument.
1. To constitute a public utility, there must be a "dedication" of property to the public use. Dedication may be express or may be implied from conduct.
2. Based on the conduct of Union Pacific and SP, the Keene Water System has been dedicated to public use.
3. The Keene Water System is a public utility water system under Section 2701.
4. Section 2704 does not exempt the Keene Water System from Commission regulation.
5. Union Pacific should file an application to establish rates.
6. Today's decision should be made effective immediately so that the operation of the Keene Water System may be swiftly brought into conformity with statutes and regulations governing public utilities.
IT IS ORDERED that:
1. Union Pacific Railroad Company (Union Pacific) shall file an application within 60 days setting forth just and reasonable rates for water service to communities of Keene and Woodford in Kern County.
2. Union Pacific may file an Application to transfer the Keene Water System.
3. The motion of Union Pacific to strike portions of the testimony of Stonybrook Corporation is granted in full.
4. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
APPENDIX A:
Summary of Agreements
Between Union Pacific/Southern Pacific and
Water Customers in the Kern County Communities of Keene and Woodford
1. Upper and Lower Keene Groups Agreements
Two agreements between SP and Elmer Brown (Upper Keene Group, 1954) and SP and Keene Lower Group (1960) provide:
Railroad hereby permits Licensee, as a matter of accommodation, and not as a legal right, to take and appropriate temporarily such surplus water from the water system of Railroad as is available and can be spared in the judgment of Railroad at Woodford (Keene), County of Kern, State of California; it being expressly understood and agreed that the railroad is not engaged, nor does it intend to engage, in the business of developing, supplying or distributing water to Licensee, the public or any one else for domestic, manufacturing, or any other purpose, and, in consideration of the accommodation service given by Railroad hereunder, Licensee hereby expressly waives all claim against said Railroad for failure at any time to furnish water to Licensee.
These agreements remain in effect and are subject to termination on thirty days' written notice. There is a supplemental agreement with Elmer Brown (Upper Keene Group, 1959).
2. National Farm Workers Service Center/Stonybrook Corporation Agreements
SP and National Farm Workers Service Center, Inc. (the parent company of Stonybrook, hereafter referred to as Stonybrook) adjudicated their respective rights in Superior Court. The judgment entered provides that:
The NFW may continue to divert water from the SP water line at a rate not to exceed 30,000 gallons per day, expense free, until December 31, 1985. Southern Pacific and the NFW shall execute a surplus water agreement for the delivery of water during 1986 in the form attached as Exhibit B. Southern Pacific shall have no obligation to deliver water to the NFW after December 31, 1986. (Southern Pacific Transportation Company v. National Farm Workers Service Center, Inc., Superior Court, Kern County, Case No. 179754, entered August 22, 1986.)
An emergency water agreement entered into between SP and Stonybrook on January 15, 1988, for a maximum of thirty days provides:
Railroad hereby permits Licensee, as a matter of neighborly accommodation, and not as a legal right, to take and appropriate temporarily such surplus water from the water system of Railroad as is available and can be spared in the judgment of the Railroad at B-Main Engineer's Station 13476+65.0, County of Kern, State of California; it being expressly understood and agreed that the Railroad is not engaged, nor does it intend to engage, in the business of developing, supplying or distributing water to Licensee, the public or any else for domestic, manufacturing, or any other purpose, and Railroad's water supply has not been and is not now dedicated to public use . . .
The parties entered into subsequent emergency water agreements in August, September, and October, 1988. The last agreement remained in effect until December 31, 1988.
3. Kern County Fire Department Agreement
In June 1992, SP and Kern County entered into an emergency water agreement for the Kern County Fire Department to remain in effect until December 31, 1992. The agreement provides:
The Railroad hereby permits the Licensee, as a matter of neighborly accommodation, and not as a legal right, to take and appropriate temporarily such water from the water system of the Railroad as is available and can be spared in the judgment of the Railroad at lower Keene. All water delivered hereunder shall be delivered by the Railroad to the Licensee on the downstream side of the Railroad's meter on the Railroad's pipeline at lower Keene. . . The Licensee hereby acknowledges that . . . (c) the Railroad is not engaged, nor does it intend to engage, in the business of developing, supplying or distributing water to the Licensee, the public or anyone else for domestic, manufacturing, or other purposes, (d) the Railroad's water supply has not been and is not now dedicated to public use . . .
The original agreement was amended several times to remain in effect until December 31, 1994. The agreement has expired, but Union Pacific continues to provide water to the Kern County Fire Department.
4. Cummings Settlement Agreement
SP and the Cummings entered into an agreement in the early 1980's that permitted the Cummings to connect to the railroad's water system. SP/Union Pacific and the Cummings disagreed on the specific terms of that agreement. In an April 2000 settlement agreement, Union Pacific and Barbara and Steven Cummings agreed that Cummings would be responsible for all water from and after May 1, 2000, and Cummings agreed to relinquish any disputed claimed right for the supply of water by Union Pacific to Cummings.
5. Schneider and Barker (Three Peaks Ranch) Easement
On December 1, 1997, Schneider and Barker granted Union Pacific an easement. Union Pacific agreed:
Subject to the availability of adequate water from its wells in Keene, to supply [Schneider and Barker] with water . . . [Schneider and Barker] shall have the right to not more than 48,000 gallons of water per month free of charge. If [Schneider and Barker] uses any water above that monthly amount, [Schneider and Barker] shall pay [Union Pacific] at rates equal to the rates [Union Pacific] normally charges its other water customers in the Keene area.
The easement is irrevocable.
6. Tony Martin Connection
Union Pacific provided a direct connection to Tony Martin, a former customer in the Lower Keene Group, at his request in 1997. The line to Martin was in poor condition and in serious need of replacement.
(END OF APPENDIX A)
APPENDIX B:
Appearances
APPEARANCES
************ APPEARANCES ************
Bridget Beard
PO BOX 118
KEENE CA 93531
(661) 822-3823
reigler@cybersurfers.net
For: SELF
Donna Christy
PO BOX 67
KEENE CA 93531
(661) 822-3448
For: SELF
Mark Dowdle
PO BOX 274
BAKERSFIELD CA 93302-0274
(661) 664-3233
mdowdle@csub.edu
For: DOWDLE
Wayne Williamson
EXCELLENCE BY DESIGN
701 EL DORADO ST.
VALLEJO CA 94590
(707) 552-5699
salt001@zeronet.net
For: EXCELLENCE BY DESIGN
Peter G. Fairchild
Legal Division
RM. 5038
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-2049
pgf@cpuc.ca.gov
For: WATER DIVISION - RATEPAYER REPRESENTATION BRANCHPeter G. Fairchild
Legal Division
RM. 5038
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-2049
pgf@cpuc.ca.gov
For: WATER DIVISION - RATEPAYER REPRESENTATION BRANCH
Margaret Henderson
Property Owner/Water Consumer
30166 WOODFORD-TEN ROAD
KEENE CA 93531
(661) 822-5608
For: SELF
Emilio J. Huerta
Attorney At Law
LAW OFFICE OF EMILIO J. HUERTA
108 SOUTH ROBINSON STREET
TEHACHAPI CA 93561
(661) 823-9300
For: CUSTOMER STONYBROOK CORPORATION
Robert C. Bylsma
Attorney At Law
UNION PACIFIC RAILROAD
10031 FOOTHILLS BLVD. SUITE 200
ROSEVILLE CA 95747
For: UNION PACIFIC RAILROAD COMPANY
Ronald L. Wade
UPPER KEENE WATER USER
PO BOX 37
KEENE CA 93531
(661) 822-6698
For: UPPER KEENE
(END OF APPENDIX B)
