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Legal Memorandum: Retirement of Long-Lived Assets in AZ

Issue: Legal Obligations for the Retirement of Long-Lived Assets for Public Utility Operators in Arizona.

Area of Law: Administrative Law, Administrative Law & Regulation (Federal and State), Environmental Law
Keywords: Retirement or abandonment of long-lived assets; Public utility operators; Legal obligations
Jurisdiction: Arizona
Cited Cases: None
Cited Statutes: Ariz. Rev. Stat. § 40-353, § 40-360.22(I), § 40-360.30; Ariz. Admin. Code R14-2-703, R14-2-703(D)(1)(d), R14-2-202(B); R14-2-302(B)
Date: 11/01/2004

Title 40 of the Arizona Revised Statutes governs public utility operators.  There are no specific provisions within that title that directly address the obligations of a public utility on the abandonment of a long-term asset.  Article 6.1 of Chapter 2, however, addresses the Conversion of Overhead Electric and Communication Facilities.  The only statute therein that references termination of use provides that once overhead lines are removed, they cannot be reinstalled above ground.  Ariz. Rev. Stat. § 40-353 (2004).  Article 6.3, which addresses underground facilities and excavations, requires that utilities identify belowground facilities and establishes a one-call center to provide information on the exact location of buried utilities.  A utility must notify the excavator whether a facility is active or abandoned.  Id. § 40-360.22(I).  The statute deems inactive facilities as active unless testing has been done to verify the facility is abandoned.  Id.  Installation records of underground facilities must be maintained and kept current, indicating deviations, corrections and field notes, which include information as to whether the equipment has been abandoned.  Id. § 40-360.30.

On the administrative side, Title 14 of the Arizona Administrative Code governs public utilities.  Article 2 governs electricity; Article 3 governs gas.  Planning requirements for both types of utilities are contained in Article 7.  As part of the planning process, a utility must provide information, at three-year intervals, concerning its next ten years of operation.  Ariz. Admin. Code R14-2-703 (2004).  As part of that report, the utility is required to include information on the "discontinuation, decommissioning, or mothballing […]

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