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