BILL ANALYSIS                                                                                                                                                                                                    



                                                          SB 177
                                                          Page  1

SENATE THIRD READING
SB 177 (Peace)
As Amended September 7, 1999
Majority vote 

  SENATE VOTE  :32-1  
 
  UTILITIES AND COMMERCE          10-0                 
APPROPRIATIONS      13-7        
  
 ----------------------------------------------------------------- 
|Ayes:|Wright, Pescetti,         |Ayes:|Migden, Cedillo, Davis,   |
|     |Campbell, Frusetta,       |     |Hertzberg, Kuehl,  Papan, |
|     |Maddox, Mazzoni, Papan,   |     |Romero, Shelley,          |
|     |Reyes, Vincent, Wesson    |     |Steinberg, Thomson,       |
|     |                          |     |Wesson, Wiggins, Wright,  |
|-----+--------------------------+-----+--------------------------|
|     |                          |Nays:|Brewer, Ackerman,         |
|     |                          |     |Ashburn, Campbell,        |
|     |                          |     |Maldonado, Runner, Zettel |
 ----------------------------------------------------------------- 

  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 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 any utility seeking to condemn property to file a  
  complaint or petition at CPUC, serve personal notice upon all  
  affected property owners and conduct an adjudication hearing.   


4)Requires that CPUC hearings be conducted in the local  








                                                          SB 177
                                                          Page  2

  jurisdiction and that CPUC make a finding that the public  
  interest would be served if either of the following conditions  
  are met:

   a)   The proposed condemnation is necessary to provide  
     service as a provider of last resort to an unserved area,  
     except when there are competing offers from facility-based  
     carriers to serve that area; or,

   b)   The public interest requires the project; the property  
     is necessary for the project; the public benefit of  
     acquiring the property by eminent domain outweighs the  
     hardship to the owners of the property; and the project is  
     located in a manner most compatible with the greatest  
     public good and least amount of private injury.

5)Requires CPUC to comply with hearing guidelines including, but  
  not limited to, the following:

   a)   Commence hearing within 45 days of the date of the  
     petition unless respondent establishes that an extension of  
     not more than 30 days is necessary for discovery or other  
     hearing preparation.

   b)   Provide copies of the hearing notice to the local  
     jurisdiction in time for that local jurisdiction to provide  
     at least seven days advance notice to interested persons.

   c)   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.  

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, refined petroleum product  
  common carrier pipelines, and water corporations. 

8)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.

9)Expands the environmental factors that should be considered by  








                                                          SB 177
                                                          Page  3

  the San Francisco Bay Conservation and Development Commission  
  (SFBCDC) when considering permit applications to place fill in  
  the bay.

  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  :  Annual special fund costs to CPUC of about  
$300,000.  

  COMMENTS  :  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, 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  ."  

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 (e.g., 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."

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.  This bill contains a process to  
provide electrical and gas corporations the ability to use  
existing eminent domain processes for the condemnation of  








                                                          SB 177
                                                          Page  4

property necessary solely to meet their commission-ordered  
obligation to serve.  If, however, an electrical or gas  
corporation seeks to acquire property for its commission-ordered  
obligations and also uses that acquisition of property to  
provide competitive telecommunications services, they will be  
required to comply with the process embodied in this bill. 

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.   
This provision is to ensure that no further attempts are made at  
the airport to acquire property by eminent domain.  

SFBCDC evaluates applications for development and landfill in  
the San Francisco Bay.  This bill expands the environmental  
factors that should be evaluated by SFBCDC when considering the  
permit applications to place fill in the bay and certain  
waterways.  


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


                                                      FN: 0003324