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Natural Gas Franchise Agreements

This page provides a basic overview of natural gas franchises and relevant Washington State laws, as well as examples of local franchise agreements in Washington.

Overview

State statutes provide authority to local government jurisdictions to grant franchises for the installation of transmission and distribution facilities along, above and under the public rights-of-way. See RCW 36.55.010 for counties; RCW 35.22.280 & RCW 35.22.195 for 1st class cities; RCW 35.23.440(37) for 2nd class cities; RCW 35.27.370(12) for towns; and RCW 35A.47.040 for code cities. This franchising authority has been interpreted broadly. Under the general police power, local governments can impose conditions on the way that private and public utilities not only install facilities in the public rights-of-way, but also how they install facilities on private property. This is due to the public safety and health considerations involved with many utilities. For instance, a petroleum or natural gas pipeline rupture that occurs on private property may endanger many nearby residents.

Content of Franchises

Natural gas franchises for the installation or operation of transmission or distribution lines typically include provisions addressing the following:

  • Bonding and insurance requirements;
  • Coordination of construction work in the public rights-of-way;
  • Sharing information concerning future construction or expansion plans;
  • Indemnification;
  • Compliance with federal and state construction and safety regulations;
  • Periodic testing of pipelines;
  • Relocation costs;
  • Ruptures, leaks and emergency response;
  • Dispute resolution;
  • Abandonment of facilities;
  • Participation in one-call locator services;
  • Assignment or transfer of the franchise;
  • Franchise fees.

Franchise Fees

Note that franchise fees allowed under current state laws are limited to the recovery of actual administrative expenses incurred by the jurisdiction. Cities can, however, impose a utility tax on the revenue of the company from services provided within the jurisdiction (See RCW 35.21.860 and RCW 35.21.86.)

Examples of Natural Gas Franchise Agreements

MRSC has developed a model franchise ordinance for major transmission natural gas pipelines. Below are some examples of natural gas franchise agreements. 


Last Modified: February 23, 2024