S T A T E   O F   N E W   Y O R K
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                                  5585

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            February 13, 2009
                               ___________

Introduced by M. of A. OAKS, BARRA, CROUCH, FINCH, WALKER -- Multi-Spon-
  sored by -- M. of A.  ALFANO, BACALLES, BARCLAY, BUTLER, DUPREY, ERRI-
  GO, GIGLIO, JORDAN, KOLB, McDONOUGH, MILLER, RABBITT, SAYWARD, SCOZZA-
  FAVA, TOWNSEND -- read once and referred to the Committee on Energy

AN  ACT to amend the public service law, in relation to establishing the
  natural gas infrastructure act; and providing for the repeal  of  such
  provisions upon expiration thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Legislative intent. The legislature hereby recognizes  that
in order to retain and create jobs in rural communities, the availabili-
ty  of  natural  gas  distribution  systems is often critical to certain
manufacturers and other energy users. The legislature further recognizes
that under current law, the public service commission will  not  approve
projects  submitted  by gas utilities if the project costs exceed antic-
ipated revenues. In order to make such projects viable, the natural  gas
infrastructure  grant  fund  established by this act would provide up to
fifty percent of the total costs of an eligible project in the form of a
grant to a requesting county industrial development agency, or  agencies
if  the project crossed county lines. The agency would own those facili-
ties paid for by this fund and would provide local input  and  oversight
in addition to the franchise powers already given to municipalities. The
franchised  natural  gas  local distribution company would operate those
sections of the distribution system owned by the industrial  development
agency.
  S  2.  Short  title.  This  act shall be known and may be cited as the
"natural gas infrastructure act".
  S 3. The public service law is amended by adding a new article  12  to
read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04333-01-9

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                               ARTICLE 12
                     NATURAL GAS INFRASTRUCTURE ACT
SECTION 236. DEFINITIONS.
        237. CREATION OF THE NATURAL GAS INFRASTRUCTURE GRANT FUND.
        238. DUTIES AND RESPONSIBILITIES OF THE DEPARTMENT IN RESPECT TO
               THE NATURAL GAS INFRASTRUCTURE GRANT FUND.
        239.  CRITERIA  FOR  SELECTION  OF  AND  FINANCIAL ASSISTANCE TO
               ELIGIBLE PROJECTS.
        240. GRANT AGREEMENTS.
        241. INSPECTION AND CERTIFICATION.
        242. NONCOMPLIANCE; NOTIFICATION; APPLICATION FOR SERVICE.
  S 236. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:
  1. "CONSTRUCTION" MEANS THE ERECTION,  BUILDING,  ACQUISITION,  ALTER-
ATION,  RECONSTRUCTION,  IMPROVEMENT,  ENLARGEMENT  OR  EXTENSION  OF AN
ELIGIBLE PROJECT; THE INSPECTION AND SUPERVISION THEREOF; AND THE  ENGI-
NEERING,  ARCHITECTURAL,  LEGAL, FISCAL, AND ECONOMIC INVESTIGATIONS AND
STUDIES, SURVEYS,  DESIGNS,  PLANS,  WORKING  DRAWINGS,  SPECIFICATIONS,
PROCEDURES, AND OTHER ACTIONS NECESSARY THERETO.
  2.  "ELIGIBLE  PROJECT" MEANS A PROJECT INTENDED TO EXTEND NATURAL GAS
SUPPLY FACILITIES TO RURAL AREAS FOR ECONOMIC  DEVELOPMENT  PURPOSES  BY
THE  CONSTRUCTION  OF NATURAL GAS DISTRIBUTION FACILITIES TO ONE OR MORE
IDENTIFIED USERS WHICH SHALL INCLUDE, BUT NOT BE LIMITED TO, MAIN  LINE,
SERVICE LINE, AND APPURTENANT FACILITIES WITH A PROPOSAL JOINTLY SUBMIT-
TED  BY  THE COUNTY INDUSTRIAL DEVELOPMENT AGENCY AND LOCAL DISTRIBUTION
COMPANY TO THE DEPARTMENT IN A MANNER PRESCRIBED BY THE DEPARTMENT.
  SUCH ELIGIBLE PROJECTS WILL BE TO EXTEND GAS TO TOWNS WHOLLY MORE THAN
FIFTEEN MILES FROM THE BOUNDARY OF A CITY WITH  A  POPULATION  OF  FIFTY
THOUSAND OR MORE PEOPLE, AND WHOLLY MORE THAN TWENTY-FIVE MILES FROM THE
BOUNDARY  OF  A  CITY  WITH A POPULATION OF TWO HUNDRED THOUSAND OR MORE
PEOPLE; AND THE POPULATION DENSITY OF SUCH A TOWN, INCLUDING ITS MUNICI-
PAL SUBDIVISIONS, CAN BE NO MORE THAN  FOUR  HUNDRED  FIFTY  PEOPLE  PER
SQUARE MILE. A PROJECT WILL NOT BE CONSIDERED AN ELIGIBLE PROJECT IF ITS
COMPLETION  WOULD  RESULT  IN  A  BYPASS  OR RISK OF BYPASS TO ANY LOCAL
DISTRIBUTION COMPANY. A BYPASS OR RISK  OF  BYPASS  WILL  EXIST  IF  THE
COMPLETED  PROJECT  DISPLACES ANY OTHER LOCAL DISTRIBUTION COMPANY'S GAS
LOAD OR GAS LOAD OPPORTUNITY, UNLESS  THAT  LOCAL  DISTRIBUTION  COMPANY
CHOOSES NOT TO EXERCISE SUCH GAS LOAD OPPORTUNITY.
  3. "ELIGIBLE COSTS" MEANS THAT PORTION OF AN ELIGIBLE PROJECT THAT MAY
QUALIFY  FOR MONEYS FROM THE FUND. IN NO EVENT MAY ELIGIBLE COSTS EXCEED
FIFTY PERCENT OF THE TOTAL COSTS OF THE ELIGIBLE PROJECT.
  4. "GRANT AGREEMENT" MEANS AN AGREEMENT BETWEEN THE DEPARTMENT AND ONE
OR MORE RECIPIENTS MEETING THE REQUIREMENTS OF THIS ARTICLE.
  5. "FUND" MEANS THE NATURAL GAS INFRASTRUCTURE GRANT FUND  ESTABLISHED
PURSUANT TO THIS ARTICLE.
  6. "LOCAL DISTRIBUTION COMPANY" MEANS A FRANCHISED NATURAL GAS UTILITY
FULLY  SUBJECT  TO THE JURISDICTION AND SUPERVISION OF THE DEPARTMENT IN
ALL RESPECTS AND HAVING A TARIFF PUBLICLY  FILED  AND  APPROVED  BY  THE
COMMISSION PRIOR TO THE DISBURSEMENT OF ANY MONIES.
  7.  "RECIPIENT"  MEANS  A  COUNTY  INDUSTRIAL  DEVELOPMENT  AGENCY, IN
ACCORDANCE WITH ARTICLE EIGHTEEN-A OF THE GENERAL MUNICIPAL  LAW,  WHICH
IS  EMPOWERED TO CONSTRUCT A PORTION OF THE ELIGIBLE PROJECT, OR ANY TWO
OR MORE OF THE FOREGOING WHICH ARE ACTING JOINTLY  AND  WITH  THE  PRIOR
CONSENT  OF  THE  LOCAL  DISTRIBUTION COMPANY HOLDING A FRANCHISE IN THE
AREA IN WHICH THE PROPOSED PROJECT IS LOCATED.
  8. "COMMISSION" MEANS THE PUBLIC SERVICE COMMISSION.

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  9. "DEPARTMENT" MEANS THE DEPARTMENT OF PUBLIC SERVICE.
  10.  "FRANCHISE"  MEANS  A  GAS  FRANCHISE  IN ACCORDANCE WITH SECTION
SIXTY-EIGHT OF THIS CHAPTER OR, IN THE ABSENCE OF AN EXPRESS  FRANCHISE,
THE  CURRENT  AND HISTORIC RIGHT AND OBLIGATION TO SUPPLY GAS SERVICE IN
THE PROJECT AREA.
  11. "PROJECT FACILITIES" SHALL MEAN, BUT NOT BE LIMITED TO,  ANY  MAIN
LINE,  SERVICE  LINE  AND APPURTENANT FACILITIES CONSTRUCTED PURSUANT TO
THE AUTHORITY OF THIS ARTICLE.
  S 237. CREATION OF THE  NATURAL  GAS  INFRASTRUCTURE  GRANT  FUND.  1.
THERE  IS  HEREBY ESTABLISHED IN THE JOINT CUSTODY OF THE DEPARTMENT AND
THE STATE COMPTROLLER A SPECIAL FUND TO BE KNOWN  AS  THE  "NATURAL  GAS
INFRASTRUCTURE  GRANT FUND".  THE STATE COMPTROLLER MAY ESTABLISH WITHIN
THE NATURAL GAS INFRASTRUCTURE GRANT FUND ADDITIONAL ACCOUNTS OR  SUBAC-
COUNTS  AND  SPECIFY ANY CONDITIONS APPLICABLE TO THE TRANSFER OF MONEYS
BETWEEN SUCH ACCOUNTS OR SUBACCOUNTS.  WITH  RESPECT  TO  EACH  ELIGIBLE
PROJECT,  THE  DEPARTMENT  SHALL  ESTABLISH AND MAINTAIN A RECORD OF THE
FUNDS ALLOCATED TO EACH PROJECT.
  2. SUCH FUND SHALL CONSIST OF MONEYS APPROPRIATED BY  THE  LEGISLATURE
FOR THE PURPOSE OF SUCH FUND OR OTHERWISE TRANSFERRED BY LAW, AS WELL AS
INVESTMENT  EARNINGS  ON AMOUNTS IN SUCH FUND.  MONEYS SHALL BE PAID OUT
OF THE ACCOUNT ON THE AUDIT AND WARRANT  OF  THE  STATE  COMPTROLLER  ON
VOUCHERS CERTIFIED OR APPROVED BY THE COMMISSION.
  3.  MONEYS  IN  THE  NATURAL  GAS  INFRASTRUCTURE  GRANT FUND SHALL BE
APPLIED OR DISTRIBUTED BY THE DEPARTMENT IN ACCORDANCE WITH THIS ARTICLE
AND THE APPLICABLE PROVISIONS  OF  THIS  CHAPTER  TO  PROVIDE  FINANCIAL
ASSISTANCE  TO  RECIPIENTS  FOR ACQUISITION AND CONSTRUCTION OF ELIGIBLE
PROJECTS AND TO PROVIDE FOR THE COSTS OF THE ADMINISTRATION AND  MANAGE-
MENT OF THE FUND.
  S 238. DUTIES AND RESPONSIBILITIES OF THE DEPARTMENT IN RESPECT TO THE
NATURAL  GAS  INFRASTRUCTURE  GRANT FUND. THE DEPARTMENT SHALL UNDERTAKE
AND PROVIDE ASSISTANCE IN SUPPORT  OF  THE  PROGRAM  TO  MAKE  FINANCIAL
ASSISTANCE   AVAILABLE  TO  RECIPIENTS  TO  ENCOURAGE  AND  SUPPORT  THE
CONSTRUCTION OF NATURAL GAS DISTRIBUTION FACILITIES IN  ACCORDANCE  WITH
THE  PROVISIONS OF THIS ARTICLE OR ANY OTHER PROVISION OF LAW, AS DETER-
MINED BY THE COMMISSION.
  S 239. CRITERIA FOR SELECTION OF AND FINANCIAL ASSISTANCE TO  ELIGIBLE
PROJECTS.  1.  THE  DEPARTMENT SHALL ESTABLISH PROCEDURES AND PROMULGATE
REGULATIONS, WHICH SHALL INCLUDE, BUT SHALL NOT BE LIMITED TO,  CRITERIA
AND STANDARDS FOR SELECTION OF ELIGIBLE PROJECTS; DETERMINING THE AMOUNT
OF  FINANCIAL ASSISTANCE TO A RECIPIENT FOR AN ELIGIBLE PROJECT; AND THE
MANNER IN WHICH GRANT MONEYS SHALL BE APPLIED AND DISTRIBUTED.
  2. PURSUANT TO THE PROVISIONS OF THIS ARTICLE,  THE  DEPARTMENT  SHALL
REVIEW, WITH THE ADVICE OF LOCAL DISTRIBUTION COMPANIES AND IN CONSULTA-
TION  WITH  THE  STATE  DEPARTMENT OF ECONOMIC DEVELOPMENT AND ANY STATE
AGENCY OR ENTITY WHICH IN THE DISCRETION OF  THE  DEPARTMENT  IT  SHOULD
WISH  TO  CONSULT, APPLICATIONS FOR GRANT MONEYS OF POTENTIALLY ELIGIBLE
PROJECTS. REVIEW OF SUCH APPLICATIONS SHALL INCLUDE,  BUT  NEED  NOT  BE
LIMITED  TO,  AN  ASSESSMENT  OF  (A)  THE  IMPACT ON JOB GROWTH AND JOB
RETENTION IN THE AFFECTED MUNICIPALITIES; (B) THE IMPACT  ON  ANY  OTHER
GEOGRAPHICAL  AREA  OF  THE  STATE;  (C)  THE  POPULATION DENSITY OF THE
AFFECTED MUNICIPALITY; (D) THE AFFECTED MUNICIPALITY'S LACK OF PROXIMITY
TO A METROPOLITAN AREA; (E) THE AVAILABILITY OF AN ALTERNATE  SOURCE  OF
FUNDING  FOR  THE  PROPOSED  PROJECT;  (F)  THE  IMPACT ON ACHIEVING THE
REGION'S AND THE STATE'S TECHNOLOGY AND ECONOMIC DEVELOPMENT GOALS;  (G)
PUBLIC HEALTH AND SAFETY; AND (H) COMPLIANCE WITH STATE AND FEDERAL LAW,
RULES AND REGULATIONS.

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  3.  NO  PROVISION  OF  THIS ARTICLE SHALL BE DEEMED TO REQUIRE A LOCAL
DISTRIBUTION COMPANY HOLDING A FRANCHISE IN,  OR  HISTORICALLY  SERVING,
THE  AREA  IN  WHICH  THE  PROPOSED  PROJECT  IS  LOCATED TO UNDERTAKE A
PROPOSED PROJECT.
  S  240.  GRANT AGREEMENTS. 1.  PRIOR TO THE DISBURSEMENT OF ANY MONIES
FROM THE FUND, THE DEPARTMENT AND ANY  RECIPIENT  HAVING  THE  POWER  TO
CONTRACT  WITH  RESPECT  TO  THE  FINANCING OF AN ELIGIBLE PROJECT SHALL
ENTER INTO A GRANT DISBURSEMENT AGREEMENT PROVIDING FOR THE CONSTRUCTION
OF THE ELIGIBLE PROJECT. THE DEPARTMENT SHALL  PREPARE  EACH  AGREEMENT,
WHICH SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING PROVISIONS:
  (A) A DESCRIPTION OF THE ELIGIBLE PROJECT AND THE TOTAL PROJECT COST;
  (B) A DETAILED ESTIMATE OF THE ELIGIBLE PROJECT COST;
  (C)  THE  RIGHT  OF  THE  DEPARTMENT  TO  APPROVE  ANY  CONTRACTS  FOR
CONSTRUCTION FUNDING PURSUANT TO  THE  AGREEMENT,  AND  TO  INSPECT  AND
REVIEW  THE CONSTRUCTION OF ELIGIBLE PROJECTS TO THE EXTENT PERMITTED BY
LAW AND RULES AND REGULATIONS OF THE DEPARTMENT.
  (D) REMEDIES IN THE EVENT OF A RECIPIENT'S FAILURE TO COMPLY WITH  THE
TERMS OF AN AGREEMENT; AND
  (E)  AN AGREEMENT BY THE DEPARTMENT TO GRANT TO THE RECIPIENT, FOR THE
PARTIAL CONSTRUCTION OF AN ELIGIBLE PROJECT, A SPECIFIED AMOUNT  NOT  TO
EXCEED   FIFTY  PERCENT  OF  THE  ESTIMATED  REASONABLE  TOTAL  COST  OF
CONSTRUCTION OF THE  ELIGIBLE  PROJECT  ESTABLISHED  IN  THE  AGREEMENT,
SUBJECT TO THE ABILITY OF THE DEPARTMENT TO PROVIDE SUCH MONEYS, INCLUD-
ING  ANY OTHER APPROVALS REQUIRED BY STATE OR FEDERAL LAW AND SUCH OTHER
CONDITIONS AS THE DEPARTMENT SHALL DETERMINE NECESSARY OR DESIRABLE.
  (F) AN AGREEMENT BY THE RECIPIENT TO:
  (I) PROCEED EXPEDITIOUSLY WITH AND COMPLETE THE  ELIGIBLE  PROJECT  IN
ACCORDANCE WITH PLANS APPROVED;
  (II)  OPERATE  AND  MAINTAIN  THE  ELIGIBLE PROJECT IN ACCORDANCE WITH
APPLICABLE REQUIREMENTS OF FEDERAL AND STATE LAW;
  (III) ESTABLISH AND MAINTAIN PROJECT ACCOUNTS IN ACCORDANCE  WITH  THE
AGREEMENT AND GENERALLY ACCEPTED ACCOUNTING STANDARDS; AND
  (IV) PERMIT ANY REVIEWS OR AUDITS AND PROVIDE ASSISTANCE DETERMINED TO
BE REASONABLE AND NECESSARY BY THE COMMISSIONER.
  2.  NO  PROVISION OF THIS ARTICLE SHALL BE DEEMED TO LIMIT THE DEPART-
MENT'S ABILITY TO TERMINATE OR IMPOSE CONDITIONS UPON THE  OPERATION  OF
AN  ELIGIBLE  PROJECT  PURSUANT TO THE PROVISIONS OF THIS CHAPTER OR ANY
OTHER PROVISION OF LAW.
  3. THE DEPARTMENT SHALL MAKE ANY SUCH OTHER AGREEMENTS OR COVENANTS AS
THE DEPARTMENT MAY DEEM NECESSARY OR DESIRABLE IN  CONNECTION  WITH  THE
ISSUANCE BY THE DEPARTMENT OF ITS GRANT.
  S  241. INSPECTION AND CERTIFICATION. 1.  THE DEPARTMENT SHALL PROVIDE
THE MEANS OF ENSURING THE  COMPLIANCE  OF  RECIPIENTS  WITH  EACH  GRANT
AGREEMENT BY:
  (A)  RETAINING  THE  RIGHT TO INSPECT AND REVIEW WORK ON EACH ELIGIBLE
PROJECT IN PROGRESS AND UPON COMPLETION, AND  DETERMINING  WHETHER  SUCH
WORK  WAS UNDERTAKEN AND COMPLETED IN COMPLIANCE WITH ALL RELEVANT PLANS
AND THE TERMS OF SUCH  FINANCING  AGREEMENT  TO  THE  EXTENT  THAT  SUCH
INSPECTIONS AND REVIEW ARE PERMITTED BY LAW AND RULES AND REGULATIONS OF
THE DEPARTMENT;
  (B)  RETAINING THE RIGHT TO DISBURSE OR REFUSE TO DISBURSE PAYMENTS TO
A RECIPIENT PURSUANT TO A GRANT AGREEMENT BASED UPON THE  DETERMINATIONS
OF ANY REVIEW OR AUDIT;
  (C)  ESTABLISHING REMEDIES IF WORK ON AN ELIGIBLE PROJECT HAS NOT BEEN
COMPLETED IN ACCORDANCE WITH ALL RELEVANT PLANS AND THE  TERMS  OF  SUCH
GRANT AGREEMENT DUE TO FACTORS WITHIN THE RECIPIENT'S CONTROL; AND

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  (D) REQUIRING A RECIPIENT TO MAINTAIN PROJECT ACCOUNTS WITH RESPECT TO
ANY ELIGIBLE PROJECT.
  2. NOTHING HEREIN SHALL BE CONSTRUED TO AFFECT OR DIMINISH THE GENERAL
AUTHORITY  OF  THE  DEPARTMENT  TO  INSPECT  AND  REVIEW THE WORK ON ANY
PROJECT FINANCED PURSUANT TO THIS ARTICLE, OR  TO  INSPECT  THE  RECORDS
RELATING TO SUCH PROJECT, FOR THE PURPOSE OF DETERMINING COMPLIANCE WITH
ANY OTHER PROVISIONS OF THIS CHAPTER.
  S  242.  NONCOMPLIANCE;  NOTIFICATION; APPLICATION FOR SERVICE. IN THE
EVENT THAT THE WORK COMPLETED PURSUANT TO AN AGREEMENT IS DEEMED NOT  IN
COMPLIANCE WITH SUCH AGREEMENT, THE DEPARTMENT SHALL EXPEDITIOUSLY NOTI-
FY THE RECIPIENT OF SUCH NONCOMPLIANCE AND INDICATE THE REASONS FOR SUCH
DETERMINATION.
  S 4. Severability. If any clause, sentence, paragraph, section or part
of  this act shall be adjudged by any court of competent jurisdiction to
be invalid and after exhaustion of  all  further  judicial  review,  the
judgment  shall  not affect, impair or invalidate the remainder thereof,
but shall be confined in its operation to the  clause,  sentence,  para-
graph,  section or part of this act directly involved in the controversy
in which the judgment shall have been rendered.
  S 5. This act shall take effect immediately and shall  expire  and  be
deemed  repealed  4  years  after such date; provided, however, that any
rules and regulations necessary for the timely  implementation  of  this
act on its effective date shall be promulgated on or before such date.