S T A T E O F N E W Y O R K
________________________________________________________________________
6544
2013-2014 Regular Sessions
I N A S S E M B L Y
April 4, 2013
___________
Introduced by M. of A. OAKS -- read once and referred to the Committee
on Energy
AN ACT to amend the public service law and the state finance law, in
relation to establishing the natural gas infrastructure act
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
the availability of natural gas distribution systems is critical to
certain manufacturers and other energy users. The legislature further
recognizes that, in the wake of imminent increase of natural gas
production, the state will subsequently realize excess revenue associ-
ated with additional economic activity. As the energy industry alone
lacks the ability to sustain infrastructure projects that would connect
all potential consumers of natural gas in the state, the legislature
herein acts to remedy the issue. In order to make such projects viable,
the natural gas infrastructure fund established by this act would
provide up to one hundred percent of the total costs of an eligible
project to a requesting eligible entity. The entity would own those
facilities paid for by this fund, would provide oversight in addition to
the franchise powers already given to municipalities of the facilities,
and would solicit local input with regard to oversight. The franchised
natural gas local distribution company would operate those sections of
the distribution system owned by the entity.
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:
ARTICLE 12
NATURAL GAS INFRASTRUCTURE ACT
SECTION 236. DEFINITIONS.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09978-01-3
A. 6544 2
237. DUTIES AND RESPONSIBILITIES OF THE DEPARTMENT IN RESPECT TO
THE NATURAL GAS INFRASTRUCTURE FUND.
238. CRITERIA FOR SELECTION OF ELIGIBLE PROJECTS.
239. FINANCING AGREEMENTS.
240. INSPECTION AND CERTIFICATION.
241. 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 TO RURAL OR UNDERSERVED AREAS FOR ECONOMIC DEVELOPMENT PURPOSES
BY THE CONSTRUCTION OF NATURAL GAS DISTRIBUTION FACILITIES.
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 EXER-
CISE SUCH GAS LOAD OPPORTUNITY.
3. "ELIGIBLE COSTS" MEANS THAT PORTION OF AN ELIGIBLE PROJECT THAT MAY
QUALIFY FOR FUNDING HEREIN.
4. "FINANCING AGREEMENT" MEANS AN AGREEMENT BETWEEN THE DEPARTMENT,
THE AUTHORITY, AND ONE OR MORE RECIPIENTS MEETING THE REQUIREMENTS OF
THIS ARTICLE.
5. "FUND" MEANS THE NATURAL GAS INFRASTRUCTURE FUND ESTABLISHED PURSU-
ANT TO THIS ARTICLE AND SECTION NINETY-NINE-U OF THE STATE FINANCE LAW.
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 UTILITY OR OTHER ENTITY DEEMED ELIGIBLE, WHICH
IS EMPOWERED TO CONSTRUCT A PORTION OF THE ELIGIBLE PROJECT, OR ANY TWO
OR MORE SUCH ENTITIES 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.
9. "DEPARTMENT" MEANS THE DEPARTMENT OF PUBLIC SERVICE.
10. "AUTHORITY" MEANS THE NEW YORK STATE ENERGY RESEARCH AND DEVELOP-
MENT AUTHORITY.
11. "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.
12. "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. DUTIES AND RESPONSIBILITIES OF THE DEPARTMENT IN RESPECT TO THE
NATURAL GAS INFRASTRUCTURE FUND. THE DEPARTMENT SHALL WORK IN CONJUNC-
TION WITH THE AUTHORITY TO PROVIDE ASSISTANCE IN SUPPORT OF THE PROGRAM
TO MAKE AVAILABLE TO ELIGIBLE RECIPIENTS FUNDING FOR THE CONSTRUCTION OF
NATURAL GAS DISTRIBUTION FACILITIES IN ACCORDANCE WITH THE PROVISIONS OF
THIS ARTICLE OR ANY OTHER PROVISION OF LAW, AS DETERMINED BY THE COMMIS-
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SION. THE DEPARTMENT SHALL ACT IN A MANNER AS TO DIRECT THE AUTHORITY
REGARDING DETERMINATIONS OF PROJECT ELIGIBILITY, AND THE AUTHORITY WILL
SUBSEQUENTLY ADMINISTER FUNDING TO RECIPIENTS.
S 238. CRITERIA FOR SELECTION OF ELIGIBLE PROJECTS. 1. THE COMMISSION
SHALL ESTABLISH PROCEDURES, WHICH SHALL INCLUDE, BUT 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 FUNDING SHALL BE APPLIED AND DISTRIB-
UTED WITH THE AUTHORITY.
2. THE COMMISSION SHALL DEVISE, AND THE DEPARTMENT THEREAFTER IMPLE-
MENT, AN APPROPRIATE APPLICATION PROCESS FOR ENTITIES TO REQUEST PROJECT
FUNDING FROM THE FUND.
3. PURSUANT TO THE PROVISIONS OF THIS ARTICLE, THE COMMISSION SHALL
REVIEW, WITH THE ADVICE OF LOCAL DISTRIBUTION COMPANIES AND IN CONSULTA-
TION WITH THE STATE DEPARTMENT OF ECONOMIC DEVELOPMENT, THE AUTHORITY
AND ANY STATE AGENCY OR ENTITY WHICH IN THE DISCRETION OF THE COMMISSION
IT SHOULD WISH TO CONSULT, APPLICATIONS FOR FUNDING OF POTENTIALLY
ELIGIBLE PROJECTS. REVIEW OF SUCH APPLICATIONS SHALL INCLUDE, BUT NEED
NOT BE LIMITED TO,
(A) AN ASSESSMENT OF THE POTENTIAL AMOUNT OF CUSTOMERS WHO WOULD GAIN
CAPACITY TO PURCHASE NATURAL GAS SUPPLY;
(B) A DEMONSTRATION THAT THE PROPOSED AFFECTED AREA IS EITHER UNDER-
SERVED, OR HAS SEEN A LACK OF APPROPRIATE INFRASTRUCTURAL IMPROVEMENT
FOR ANY PERIOD OF TIME;
(C) CONSIDERATION OF THE REGION'S AND THE STATE'S INFRASTRUCTURAL,
ENERGY PLANNING AND ECONOMIC DEVELOPMENT GOALS;
(D) AN INDEPENDENT ENVIRONMENTAL REVIEW, WHICH OUTLINES THE POTENTIAL-
LY AFFECTED NATURAL RESOURCES THROUGHOUT THE AREA OF THE PROJECT, AND A
SPECIFIC PLAN TO AVOID ENVIRONMENTAL HEALTH AND SAFETY RISKS SURROUNDING
THAT AREA DURING CONSTRUCTION;
(E) DEMONSTRATION OF THE TOTAL PROJECT COST, ALONG WITH JUSTIFICATION
FOR THE COST, INCLUDING BUT NOT LIMITED TO THE APPLICANT'S CONSIDERATION
OF USING MATERIALS SOURCED WITHIN THE STATE AS WELL AS THE MOST ENVIRON-
MENTALLY SOUND PRODUCTS DURING CONSTRUCTION. NO PROVISION IN THIS
SECTION SHALL BE DEEMED TO REQUIRE APPLICANTS TO, OR LIMIT APPLICANTS
FROM, PURCHASING SPECIFIC MATERIALS; AND
(F) AN ASSESSMENT OF COMPLIANCE WITH STATE AND FEDERAL LAWS, RULES AND
REGULATIONS.
4. 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.
5. FOR ALL ELIGIBLE RECIPIENTS, PROVISIONS HEREIN MAY BE COMBINED WITH
EXISTING TAX CREDITS, EXEMPTIONS AND OTHER INCENTIVES WHICH SUPPORT
NATURAL GAS INFRASTRUCTURE, INCLUDING, BUT NOT LIMITED TO, ELIGIBLE
RECIPIENTS UNDERGOING NATURAL GAS SERVICE EXPANSION AND PROJECTS AFFECT-
ING THE RETENTION OF JOBS IN THE STATE.
S 239. FINANCING AGREEMENTS. 1. PRIOR TO THE DISBURSEMENT OF ANY FUND-
ING FROM THE FUND, THE DEPARTMENT, THE AUTHORITY AND ANY RECIPIENT
HAVING THE POWER TO CONTRACT WITH RESPECT TO THE FINANCING OF AN ELIGI-
BLE PROJECT, SHALL ENTER INTO A GRANT DISBURSEMENT AGREEMENT, PROVIDING
FOR THE CONSTRUCTION PLAN OF THE ELIGIBLE PROJECT. THE DEPARTMENT SHALL
PREPARE EACH AGREEMENT, WHICH SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
FOLLOWING PROVISIONS:
(A) A DETAILED DESCRIPTION OF THE ELIGIBLE PROJECT AND THE TOTAL
PROJECT COST;
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(B) THE RIGHT OF THE DEPARTMENT TO APPROVE ANY CONTRACTS FOR FUNDING
PURSUANT TO THE AGREEMENT, AND TO INSPECT AND REVIEW THE CONSTRUCTION OF
ELIGIBLE PROJECTS TO THE EXTENT PERMITTED BY THE LAWS, RULES AND REGU-
LATIONS OF THE DEPARTMENT;
(C) REMEDIES IN THE EVENT OF A RECIPIENT'S FAILURE TO COMPLY WITH THE
TERMS OF AN AGREEMENT;
(D) AN AGREEMENT BY THE AUTHORITY TO GRANT TO THE RECIPIENT, FOR THE
PARTIAL CONSTRUCTION OF AN ELIGIBLE PROJECT, A SPECIFIED AMOUNT OF FUND-
ING, SUBJECT TO THE ABILITY OF THE AUTHORITY TO PROVIDE SUCH FUNDS,
INCLUDING ANY OTHER APPROVALS REQUIRED BY STATE OR FEDERAL LAW AND SUCH
OTHER CONDITIONS AS THE DEPARTMENT SHALL DETERMINE NECESSARY OR DESIRA-
BLE; AND
(E) 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 COMMISSION SHALL MAKE ANY SUCH OTHER AGREEMENTS OR COVENANTS AS
THE COMMISSION MAY DEEM NECESSARY OR DESIRABLE IN CONNECTION WITH THE
FUNDING APPLICABLE HEREIN.
S 240. INSPECTION AND CERTIFICATION. 1. THE DEPARTMENT SHALL ENSURE
COMPLIANCE OF RECIPIENTS WITH EACH FINANCING 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 FINANCING AGREEMENT BASED UPON THE DETERMI-
NATIONS OF ANY REVIEW OR AUDIT;
(C) ESTABLISHING REMEDIES IF WORK ON A ELIGIBLE PROJECT HAS NOT BEEN
COMPLETED IN ACCORDANCE WITH ALL RELEVANT PLANS AND THE TERMS OF SUCH
FINANCING AGREEMENT DUE TO FACTORS WITHIN THE RECIPIENT'S CONTROL; AND
(D) REQUIRING A RECIPIENT TO MAINTAIN APPROPRIATE PROJECT ACCOUNTS AND
RECORDS 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 241. NONCOMPLIANCE; NOTIFICATION; APPLICATION FOR SERVICE. IN THE
EVENT THAT THE WORK COMPLETED PURSUANT TO AN AGREEMENT IS DEEMED NOT IN
COMPLIANCE WITH SUCH FINANCING AGREEMENT, THE DEPARTMENT SHALL EXPE-
DITIOUSLY NOTIFY THE RECIPIENT OF SUCH NONCOMPLIANCE AND INDICATE THE
REASONS FOR SUCH DETERMINATION.
S 4. The state finance law is amended by adding a new section 99-u to
read as follows:
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S 99-U. NATURAL GAS INFRASTRUCTURE FUND. 1. THERE IS HEREBY ESTAB-
LISHED IN THE JOINT CUSTODY OF THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY, HEREAFTER "THE AUTHORITY", AND THE STATE COMP-
TROLLER A SPECIAL FUND TO BE KNOWN AS THE "NATURAL GAS INFRASTRUCTURE
FUND". THE STATE COMPTROLLER MAY ESTABLISH WITHIN THE NATURAL GAS
INFRASTRUCTURE FUND ADDITIONAL ACCOUNTS OR SUBACCOUNTS AND SPECIFY ANY
CONDITIONS APPLICABLE TO THE TRANSFER OF FUNDS BETWEEN SUCH ACCOUNTS OR
SUBACCOUNTS. WITH RESPECT TO EACH ELIGIBLE PROJECT, THE AUTHORITY SHALL
ESTABLISH AND MAINTAIN A RECORD OF THE FUNDS ALLOCATED TO EACH PROJECT.
2. SUCH FUND SHALL CONSIST OF FUNDING 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. FUNDING 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. FUNDS OF THE NATURAL GAS INFRASTRUCTURE FUND SHALL BE APPLIED OR
DISTRIBUTED BY THE AUTHORITY IN ACCORDANCE WITH ARTICLE TWELVE OF THE
PUBLIC SERVICE LAW TO PROVIDE FINANCIAL ASSISTANCE TO RECIPIENTS FOR
ACQUISITION AND CONSTRUCTION OF ELIGIBLE PROJECTS AND TO PROVIDE FOR THE
COSTS OF THE ADMINISTRATION AND MANAGEMENT OF THE FUND.
S 5. 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 6. This act shall take effect on the ninetieth day after it shall
have become a law; 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.