10. Request for Exemptions

Applicant's proposed pipeline will extend approximately 10 miles to the new fuel tank storage facility to be constructed and operated by the consortium of airlines. Applicant states that shippers using the pipeline will most likely be only participants in the airline consortium and, possibly, the county airport system, the public agency responsible for Sacramento International Airport.

Because its fuel deliveries likely will be made only to airlines and a public agency, applicant asks the Commission to determine whether it is exempt from stock and security regulations in Pub. Util. Code §§ 816-830 by virtue of Section 829 of the Code. Section 829 states:

This article does not apply to any person or corporation which transacts no business subject to regulation under this part, except performing services or delivering commodities for or to public utilities or municipal corporations or other public agencies primarily for resale or use in serving the public or any portion thereof, but shall nevertheless apply to any public utility if the commission finds in a proceeding to which the public utility is or may become a party, that the application of this article is required by the public interest. The commission may from time to time by order or rule, and subject to such terms and conditions as may be prescribed therein, exempt any public utility or class of public utility from the provisions of this article if it finds that the application thereof to such public utility or class of public utility is not necessary in the public interest. (Emphasis added.)

Applicant argues that since its deliveries will probably be made only to airlines (which it describes as public utilities) and a public agency, the exemption provided by Section 829 should apply. It adds that if the Commission approves applicant's request to establish market-based rates for its transportation of jet fuel, market competition will serve to restrain the cost of capital that applicant will be able to incur and still compete effectively.

By the same token, applicant asks that it be exempted from the requirements of Pub. Util. Code §§ 851 and 854 (transfer or encumbrance of utility property) by virtue of Pub. Util. Code § 853(a), which is essentially identical to Section 829.

We decline at this time to apply the exemptions sought by applicant under Sections 829 and 853(a) of the Code. First, because of the Airline Deregulation Act of 1978, 49 U.S.C.A. §§ 1301, et seq., it is not clear that airlines served by the pipeline are "public utilities" within the meaning of these exemptions. Certainly, applicant's airline customers are not regulated by this Commission. (Morales v. Trans World Airlines, Inc. (1992) 504 U.S. 1204.) Second, applicant "anticipates" that its shippers will be only airlines and a county airport system, but it provides no assurance that other entities will not be served over time. Just as the Commission monitors the financial transactions of other pipeline companies in California, we believe that the public interest is best served by continued Commission oversight of this proposed new pipeline venture. We do not foreclose reexamination of this question at such time as the pipeline project becomes established and develops a history of operation.