BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 177|
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THIRD READING
Bill No: SB 177
Author: Peace (D) and Burton (D)
Amended: 5/19/99
Vote: 21
SENATE JUDICIARY COMMITTEE : 8-1, 4/13/99
AYES: Burton, Escutia, Haynes, Morrow, O'Connell, Peace,
Sher, Schiff
NOES: Wright
SENATE ENERGY, U.&C. COMMITTEE : 6-0, 5/11/99
AYES: Bowen, Hughes, Kelley, Peace, Solis, Speier
NOT VOTING: Alarcon, Baca, Brulte, Mountjoy, Vasconcellos
SENATE APPROPRIATIONS COMMITTEE : 12-0, 5/24/99
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Karnette, Kelley, Leslie, McPherson, Mountjoy,
Vasconcellos
NOT VOTING: Perata
SUBJECT : Public utilities: eminent domain
SOURCE : Author
DIGEST : This bill pertains to eminent domain powers for
privately owned public utilities. The bill, among other
things, limits the privilege of condemnation when used for
the purpose of competing with another entity, as specified.
ANALYSIS : Current law provides utilities with the
authority to use the power of eminent domain to condemn any
CONTINUED
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property necessary to deliver service.
This bill bars telephone corporations from condemning
property unless that property is necessary for that
telephone corporation to provide telecommunications
services to unserved areas.
This bill establishes a process by which specified public
utilities may condemn property for the purpose of competing
with another public utility. This process requires a
finding by the California Public Utilities Commission
(CPUC) that either (a) the public utility is providing
services as a provider of last resort to unserved areas, or
(b) the public interest requires the project, the property
is necessary for the project, if the property is not
acquired the hardship to the public utility outweighs any
hardship to the property owners, and the project is located
in a manner most compatible with the greatest public good
and least amount of private injury.
Before making such a finding, the CPUC shall conduct a
public hearing, as specified.
The bill provides that the above provision does not apply
to a railroad corporation or a water corporation.
This bill requires the CPUC to develop procedures to
facilitate access for affected property owners to eminent
domain proceedings.
This bill bars a public utility from entering into any
exclusive access agreement with any property owner.
Background
The right of eminent domain was originally codified in 1872
and is defined as the right of the people or government to
take private property for public use. This right may only
be exercised upon payment of "just compensation" to the
private property owner. The right of eminent domain was
only permitted to be exercised for specified public uses,
including construction of aqueducts, bridges, railroads,
pipes, and public transportation, the predecessors of
modern utility services. Current law explicitly permits
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public utilities, including railroads, and electric, gas,
water, and telephone utilities (but not cable television
corporations) to exercise the power of eminent domain.
These statutes have been unchanged since 1975.
Analysis by the California Law Revision Commission . The
California Law Revision Commission (CLRC) has been
reviewing the authority of public utilities to condemn
property and stated the following in a September 1998
recommendation:
"This authority dates from an era when the numbers of
privately owned public utilities were limited, and their
operations were superintended by the Public Utilities
Commission in a regime of monopoly regulation.
"Circumstances have changed. Deregulation has occurred in
a number of public utility industries, with a corresponding
increase in the number of competitors and decrease in
Public Utilities Commission oversight. For example, by
mid-1998, hundreds of competitors had been issued
certificates of public convenience and necessity by the
Public Utilities Commission to compete as local
telecommunications service providers.
"Deregulation has been accompanied by complaints of
inappropriate exercise or threatened exercise of
condemnation power by competitors. While the number of
complaints to date are limited, the Law Revision Commission
believes that some constraint on unfettered exercise of
eminent domain power by a privately owned public utility
may be appropriate. (Condemnation by Privately Owned
Public Utility, California Law Revision Commission
Tentative Recommendation, p. 5 (September 1998).)"
The Law Revision Commission has issued a tentative
recommendation that gives the CPUC the ability to regulate
the exercise of condemnation authority as it deems
appropriate.
Right to Condemn is Limited and Subject to Public Review,
Except When Condemnation is by Utilities . The right to
condemn, or take private property, is one of a number of
privileges that utilities enjoy in exchange for assuming
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certain burdens, such as rate regulation and providing
service to all. Other than public entities, the right to
take private property is generally limited to utilities and
certain quasi-public entities, such as nonprofit
educational institutions of collegiate grade and nonprofit
hospitals. Before the quasi-public entity can condemn the
property, the consent of the local public entity is
required. Before the local public entity may authorize the
acquisition, it must first find that:
1.The public interest and necessity require the proposed
project.
2.The proposed project is planned or located in the manner
that will be most compatible with the greatest good and
least private injury.
3.The property to be taken is necessary for the proposed
project.
4.The hardship to the quasi-public entity if the taking is
not permitted outweighs the hardship to the owners of the
property.
Under current law, when utilities condemn property no
public review is required. Despite the relative ease with
which utilities may condemn property, the incidence of
exercise of condemnation power by utilities has been low,
according to the CLRC. However, the real value in
condemnation authority lies as much with its threat as its
actual implementation.
The transformation of utility service from a tightly
controlled monopoly to a much less controlled competitive
market argues for a comparable transformation of the
historical privileges granted to utilities. Some would
argue that because electricity, natural gas, railroad, and
telecommunications services remain essential, the
unfettered power of condemnation should be retained.
However, society considers dozens of other services
essential, such as gasoline supply and food, yet
privately-owned, for-profit oil companies and farmers have
no condemnation powers.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
An accurate estimate of the number of eminent domain
proceedings and the notice costs that may result from this
bill is difficult to determine.
SUPPORT : (Verified 5/26/99)
Building Owners and Managers Association of California
Cities of Benicia, Culver City, Cupertino, Lakewood, La
Mirada, Malibu, Merced, Oceanside, Poway, Stockton, and
Thousand Oaks
League of California Cities
San Francisco International Airport
John Burnham Real Estate Services and Company
California Apartment Association
California State Council of Laborers
OPPOSITION : (Verified 5/26/99)
GTE
Williams Companies, Inc.
NC:cm 5/26/99 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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