BILL ANALYSIS
SB 177
Page 1
Date of Hearing: August 23, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 177 (Peace) - As Amended: July 8, 1999
AS PROPOSED TO BE AMENDED
SENATE VOTE : 32-1
SUBJECT : 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 on
an airport owned by a city and county and located in another
county unless that property is necessary to provide
telecommunications service in an unserved area.
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.
3)Requires that CPUC conduct a hearing in the local jurisdiction
to make a finding that the public interest would be served
pursuant if either of the following conditions are met:
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, the hardship to the public
utility would outweigh 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.
4)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.
5)Requires CPUC to provide copies of the hearing notice to the
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local jurisdiction in time for the local jurisdiction to
provide at least 7 days advance notice to interested persons.
6)Requires CPUC to render a decision within 45 days of the
conclusion date of the hearing and provides for an additional
30 days if necessary for further briefing.
7)Indicates that time limits described above will be extended,
as necessary, to accommodate a decision that requires a
California Environmental Quality Act (CEQA) review.
8)Exempts railroad corporations and water corporations.
9)Requires CPUC to develop procedures to facilitate access for
affected property owners to eminent domain proceedings.
10)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.
11)Adds an urgency clause.
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
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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
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." To that end, the author might want to consider
whether it is proper to set up a dual standard based on the
whether the utility is the provider of last resort. In the
changing competitive environment there are not clear lines of
demarcation defining who the provider of last resort is, what
services they are required to provide, what services customers
are entitled to and when the backbone utility network can be
used to provide competitive services. These are evolving
issues. To grant the provider of last resort, or monopoly
provider of service, a more simplistic standard by which to
exercise the rights of eminent domain establishes an unfair
playing field. The author might want to amend the bill to
have a single standard that must be met by all companies.
3)The initial purpose 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.
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.
4)Electrical and gas corporations are seeking an exemption to
the process outlined in this bill for its transmission and
distribution systems. Telecommunications companies oppose
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such an exemption, however, because the rights of way can be
used to construct a telecommunications network. Cited as one
example is the fact that "Southern California Edison, an
electric utility, has sought 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." While some instances
may occur where the energy companies need to be absolved from
this process, a blanket exemption is probably not the
appropriate manner to deal with those rare instances.
5)Representatives from pipeline companies that provide petroleum
products also seek an exemption to the provisions of this
bill. They assert that there is no competition for the sorts
of services they supply that would need access to the rights
of way. They derive competition from truckers who carry the
product along the highways. Based on the author's stated
purpose of limiting use of eminent domain as competitors enter
the utilities markets seeking access to the public and private
property, the pipeline industry providing petroleum products
does not seem to provide the type of competitive services
envisioned in this bill.
6)This bill includes a clause that pertains solely to the City
and County of San Francisco Airport. The author has included
this very narrow limitation due to ongoing litigation
regarding an eminent domain proceeding with a cellular
telephone company. In June, 1999, the Superior Court granted
the City's Motion for Summary Judgment thereby declaring that
there was not sufficient justification to authorize eminent
domain in this matter. The plaintiff cellular telephone
company has since appealed the ruling. This bill will ensure
that no further attempts are made at the airport to acquire
property by eminent domain. The urgency clause being amended
into this bill is intended to address this situation.
7)The author will be presenting amendments that were agreed to
at the Committee hearing on this bill in July. Those
amendments limit the strict prohibition on the telephone
corporation's use of condemnation to the San Francisco Airport
and removes the requirement that the public utility not sell
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the property for 50 years from that date of condemnation.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Culver City
National Association of Industrial and Office Properties
San Francisco International Airport
Opposition
AT&T
California Cable Television Association
Cox Communications
Williams Communications Inc.
Southern California Edison
Analysis Prepared by : Carolyn Veal-Hunter / U. & C. / (916)
319-2083