House Study Bill 640 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON GOVERNMENT OVERSIGHT BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act relating to the construction, erection, maintenance, 1 operation, or sale of specified electric transmission lines, 2 and including effective date and applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5563YC (2) 86 rn/sc

H.F. _____ Section 1. NEW SECTION . 478.6A Merchant line franchises 1 —— requirements —— limitations. 2 1. a. For purposes of this section, “bifurcation” means 3 the conducting of two separate hearings when a petition 4 involves the taking of property under eminent domain, one 5 hearing considering whether the proposed line is necessary to 6 serve a public use and represents a reasonable relationship 7 to an overall plan of transmitting electricity in the public 8 interest, and the other considering the granting of eminent 9 domain authority. 10 b. For purposes of this section, “merchant line” means a 11 high-voltage direct current electric transmission line which 12 does not provide for the erection of electric substations at 13 intervals of less than fifty miles, which substations are 14 necessary to accommodate both the purchase and sale to persons 15 located in this state of electricity generated or transmitted 16 by the franchisee. 17 2. A petition for a franchise to construct a merchant line, 18 in addition to any other applicable requirements pursuant to 19 this chapter, shall be subject to the following: 20 a. A petitioner for a franchise to construct a merchant line 21 shall be limited to two requests for bifurcation of a hearing 22 on the petition. 23 b. A person who is employed by or is in any way affiliated 24 with a petitioner for a franchise to construct a merchant 25 line shall not serve on any local board, commission, council, 26 or committee operating within or associated with any county 27 through which the proposed merchant line would be constructed. 28 c. Notwithstanding section 478.10, the sale and transfer of 29 a merchant line, by voluntary or judicial sale or otherwise, 30 shall not carry with it the transfer of the franchise. 31 d. Notwithstanding section 478.21, if a merchant line 32 that involves the taking of property under eminent domain is 33 not constructed in whole or in part within two years of the 34 first date of notification of an owner of record and party 35 -1- LSB 5563YC (2) 86 rn/sc 1/ 4

H.F. _____ in possession of property over which the use of the right of 1 eminent domain is sought, the franchise shall be forfeited 2 and the utilities board shall revoke the franchise and make a 3 record of the revocation. 4 e. Before a permit for a franchise to construct a merchant 5 line is granted under this chapter, the petitioner must file 6 and maintain with the board a surety bond in a penal sum equal 7 to fifteen percent of the estimated overall construction 8 cost of the project, with surety approved by the board, 9 conditioned that the applicant will pay any and all damages 10 legally recovered against it growing out of the construction, 11 maintenance, or operation of the transmission line in this 12 state. 13 f. A person who is employed by or contracts with a 14 petitioner for a merchant line and who is involved in the 15 construction of the merchant line in any capacity shall 16 be a resident of this state throughout the duration of the 17 construction period. 18 Sec. 2. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 19 immediate importance, takes effect upon enactment. 20 Sec. 3. APPLICABILITY. This Act is applicable to petitions 21 for franchise filed on or after November 1, 2014, that have not 22 been acted upon by the utilities board on the effective date of 23 this Act and to petitions for franchise filed on or after the 24 effective date of this Act. 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill modifies and adds provisions in Code chapter 478 29 applicable to merchant transmission lines. The bill defines a 30 “merchant line” to mean a high-voltage direct current electric 31 transmission line which does not provide for the erection of 32 electric substations at intervals of less than 50 miles, which 33 substations are necessary to accommodate both the purchase and 34 sale to persons located in Iowa of electricity generated or 35 -2- LSB 5563YC (2) 86 rn/sc 2/ 4

H.F. _____ transmitted by the franchisee. 1 The bill specifies several requirements, limitations, or 2 restrictions applicable to merchant lines, in addition to any 3 other applicable provisions in Code chapter 478. The bill 4 provides that a petitioner for a franchise to construct a 5 merchant line shall be limited to two requests for bifurcation 6 of a hearing on the petition. The bill defines “bifurcation” 7 to mean the conducting of two separate hearings when a petition 8 involves the taking of property under eminent domain. One 9 hearing is to consider whether the proposed line or lines are 10 necessary to serve a public use and represents a reasonable 11 relationship to an overall plan of transmitting electricity in 12 the public interest, and the other is to consider the granting 13 of eminent domain authority. 14 The bill provides that a person who is employed by or 15 is in any way affiliated with a petitioner for a franchise 16 to construct a merchant line shall not serve on any local 17 board, commission, council, or committee operating within or 18 associated with any county through which the proposed merchant 19 line would be constructed. The bill also provides that a 20 franchise for a merchant line shall not be transferred in a 21 sale of the merchant line. 22 Additionally, the bill provides that if a merchant line 23 that involves the taking of property under eminent domain is 24 not constructed in whole or in part within two years of the 25 first date of notification of an owner of record and party 26 in possession of property over which the use of the right of 27 eminent domain is sought, the franchise shall be forfeited and 28 revoked. 29 Further, the bill provides that before a permit for a 30 franchise to construct a merchant line is granted, the 31 petitioner must file and maintain with the Iowa utilities 32 board a surety bond equal to 15 percent of the estimated 33 overall construction cost of the project, conditioned that 34 the applicant will pay any and all damages legally recovered 35 -3- LSB 5563YC (2) 86 rn/sc 3/ 4

H.F. _____ against it growing out of the construction, maintenance, or 1 operation of the transmission line in this state. 2 Finally, the bill requires a person who is employed by or 3 contracts with a petitioner for the construction of a merchant 4 line in any capacity to be an Iowa resident throughout the 5 duration of the construction period. 6 The bill takes effect upon enactment and is applicable to 7 petitions for franchise filed on or after November 1, 2014, 8 that have not been acted upon by the board on the bill’s 9 effective date and to petitions for franchise filed on or after 10 the bill’s effective date. 11 -4- LSB 5563YC (2) 86 rn/sc 4/ 4