BILL ANALYSIS                                                                                                                                                                                                    



                                                          SB 177
                                                          Page  1

Date of Hearing:   July 12, 1999

          ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE 
                     Roderick Wright, Chair
           SB 177 (Peace) - As Amended:  July  8, 1999

  SENATE VOTE  :   32-1
  
SUBJECT  :  Public utilities: eminent domain.

 SUMMARY  :  Revises eminent domain rights as they pertain to  
public utilities that offer competitive services and establishes  
a public hearing process to determine if the public interest  
would be served through an eminent domain action.  Specifically,  
  this bill  : 

1)Prohibits a telephone corporation from condemning property  
  unless that property is necessary for that telephone  
  corporation to provide telecommunications services as a  
  carrier of last resort for unserved areas.

2)Prohibits a public utility that offers competitive services  
  from condemning property for the purpose of competing with  
  another public utility unless the California Public Utilities  
  Commission (CPUC) finds that the public interest would be  
  served by a condemnation action.  A finding that the public  
  interest would be served requires 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, (c) the property is necessary for the project, (d)  
  the hardship to the public utility would outweigh any hardship  
  to the property owners, and (e) the project is located in a  
  manner most compatible with the greatest public good and least  
  amount of private injury.

3)Requires CPUC to provide 45 days notice and conduct a public  
  hearing in the local area that would be affected by the  
  condemnation action hearing.

4)Requires CPUC to provide copies of the hearing notice to the  
  local jurisdiction in time for the local jurisdiction to  
  provide at least 7 days advance notice to interested persons.

5)Requires CPUC to render a decision within 45 days of the  
  conclusion date of the hearing and provides for an additional  








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  30 days if necessary for further briefing.  

6)Indicates that time limits described above will be extended,  
  as necessary, to accommodate a decision that requires a  
  California Environmental Quality Act (CEQA) review.

7)Exempts railroad corporations and water corporations.  

8)Requires CPUC to develop procedures to facilitate access for  
  affected property owners to eminent  domain proceedings.

9)Prohibits a public utility from entering into any exclusive  
  access agreement with any property owner or engaging any act  
  which would limit the right of any other public utility to  
  provide service to that property.
  EXISTING LAW  provides public utilities with the authority to use  
the power of eminent domain to condemn any property necessary to  
deliver service.

  FISCAL EFFECT  :   Unknown.

  COMMENTS  :   

1)The right of eminent domain was initially codified in 1872 for  
  purposes of providing people or the government the right to  
  take property for public use.  The right of eminent domain can  
  only be exercised upon payment of just compensation to the  
  private property owner.  The right of eminent domain as  
  codified in the Public Utilities Code permits public  
  utilities, including railroads, and electric, gas, water and  
  telephone utilities to exercise the power of eminent domain.   
  These statutes have been unchanged since 1975.  The right of  
  eminent domain as it pertains to these public utilities "dates  
  from an era when the numbers of privately owned public  
  utilities were limited, and their operations were  
  superintended by CPUC in a regime of monopoly regulation.  "  
   California Law Revision Commission Analysis  ."  

2)Due to deregulation of the telecommunications industry as well  
  as restructuring of the electric and gas industries, there is  
  increased competition in each of these areas.  For example,  
  today hundreds of competitors hold Certificates of Public  
  Convenience and Necessity from CPUC to compete as local  
  telecommunications service providers.  The author has  
  introduced this bill to address the changing public utility  








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  and its ability to acquire property through eminent domain.   
  According to the author, eminent domain powers "made sense  
  when the public utilities held monopoly positions and carried  
  the obligation to serve all customers in their service  
  territory." 

3)The initial need for this bill was based on the need for  
  greater scrutiny of the hundreds of telecommunications  
  companies seeking to provide services to public and private  
  property owners.  However, proponents of this bill indicate  
  and the author believes that additional scrutiny and  
  regulation of the condemnation activities of all privately  
  owned public utilities is warranted at this time.  Opponents,  
  however, believe this bill is too broad and should be limited  
  to the telecommunications industry.  Competition today,  
  however, is not limited by industry, but is rampant across the  
  gas, electric and telephone industries.  The industries are  
  beginning to converge as many non-telephone utilities provide  
  telecommunications services over their facilities and rights  
  of way.  Cited as one example is the fact that "Southern  
  California Edison, an electric utility, has authority to offer  
  telecommunications services . . . over its facilities."   
  Additionally, the Williams Company indicates that " it used  
  the rights of way of a gas pipeline corridor in eight states  
  to lay approximately 1,890 miles of fiber to construct a  
  linear telecommunications system from Houston to Washington  
  D.C. . . and that without eminent domain, one landowner could  
  have prevents the system from being built."  This bill  
  includes a prohibition against telephone corporations ever  
  having the ability to condemn property, except to provide  
  service as a carrier of last resort in unserved areas.  This  
  provision may place the telephone corporation at an extreme  
  disadvantage from a non-telephone utility that can avail  
  itself of the process outlined in this bill to gain the right  
  of eminent domain while it has been precluded from doing so.   
  Thus, in an effort to level the playing field, and to  
  acknowledge the converging competitive industries, it will be  
  important for the author to clarify how the provider of  
  competitive services rights correspond to those of the  
  provider of last resort. 

4)This bill includes a clause that pertains solely to telephone  
  corporations and indicates that a telephone corporation may  
  not condemn any property unless the property is necessary to  
  provide services as a carrier of last resort to unserved  








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  areas.  While the balance of this bill treats all public  
  utilities covered by this bill uniformly, this clause single  
  essentially removes the rights eminent domain from all  
  telephone corporations in this state.  As noted above, the  
  industries are converging and should be treated in similar  
  fashion.  Thus, the author should remove this clause which  
  provides disparate treatment of the telephone industry.  The  
  type of services provided should not be the determinative  
  factor in whether or not the exercise of eminent domain rights  
  should be granted.  

5)This bill also includes a clause intended to restrict the use  
  of or the ability to transfer or sell property that has been  
  acquired by eminent domain until it has been used for public  
  utility purposes for 50 years from the date of condemnation.   
  The potential uses of rights of way are not predictable, as  
  they were when there were a limited number of public utility  
  providers.  The industries are constantly going through  
  mergers, as demonstrated in recent months and years.  Thus,  
  this clause is unworkable and should be stricken. 

  REGISTERED SUPPORT / OPPOSITION  :

  Support  

City of Culver City
National Association of Industrial and Office Properties
San Francisco International Airport
  
Opposition 

AT&T
California Railroad Industry
California Cable Television Association
Cox Communications
Williams Communications Inc.


  Analysis Prepared by  :    Carolyn Veal-Hunter / U. & C. / (916)  
319-2083