BILL ANALYSIS                                                                                                                                                                                                    



                                                             


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|SENATE RULES COMMITTEE            |                   SB 177|
|Office of Senate Floor Analyses   |                         |
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                    UNFINISHED BUSINESS
                              

Bill No:  SB 177
Author:   Peace (D) and Burton (D)
Amended:  9/7/99
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

  SENATE FLOOR  :  32-1, 6/1/99
AYES: Alarcon, Alpert, Baca, Bowen, Brulte, Burton,  
  Chesbro, Costa, Dunn, Figueroa, Hayden, Johannessen,  
  Johnson, Johnston, Kelley, Knight, Leslie, Lewis,  
  McPherson, Monteith, Murray, O'Connell, Ortiz, Peace,  
  Perata, Polanco, Poochigian, Rainey, Schiff, Sher,  
  Speier, Vasconcellos
NOES:  Wright
NOT VOTING:  Escutia, Haynes, Hughes, Karnette, Morrow,  
  Mountjoy, Solis

  ASSEMBLY FLOOR  :  66-10, 9/10/99 - See last page for vote
 
                                                 CONTINUED





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  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, (1) limits the privilege of condemnation when used  
for the purpose of competing with another entity, as  
specified; (2) prohibits a telephone corporation from  
condemning property on specified airports.

  Assembly Amendments

  1.Add additional harmful efforts that are to be minimized  
  that impact the environment to existing legislative  
  findings in existing law.

2.Narrow condemnation portion of the bill to the San  
  Francisco International Airport.

3.Requires a public hearing in local jurisdiction that is  
  affected by a condemnation and defines "local  
  jurisdiction".
  
ANALYSIS  :    Existing law provides public utilities with  
the authority to use the power of eminent domain to condemn  
any property necessary to deliver service.

This bill 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.








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  The above 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.

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   
  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.

   C.    Defines "local jurisdiction" to mean each city  
      within those boundaries property sought to e taken by  
      eminent domain is located, and if property sought to  
      be taken is not located within city boundaries, each  
      county within those boundaries that property is  
      located.  However, where the is more than one local  







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      jurisdiction with respect to a single complaint or  
      petition, the commission shall provide notice and  
      copies of notices for mailing to all local  
      jurisdictions involved, but shall hold only a single  
      hearing in any one of those local jurisdictions.

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

  Background

  The right of eminent domain was originally codified in 1872  







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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  
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  







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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  
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  







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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.

  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  9/10/99)

Building Owners and Managers Association of California
Cities of Benicia, Culver City, Cupertino, Lakewood, La  
  Mirada, Malibu, Merced, Moreno Valley, Oceanside, Poway,  
  Stockton, and Thousand Oaks
California League of California Cities
San Francisco International Airport
California Apartment Association
California State Council of Laborers
California Business Properties Association
National Association of Office and Industrial Properties

  OPPOSITION  :    (Verified  5/26/99)

GTE
Williams Companies, Inc.


  ASSEMBLY FLOOR  :  66-10, 9/10/99
AYES:  Aanestad, Alquist, Ashburn, Bates, Baugh, Calderon,  
  Campbell, Cardoza, Cedillo, Corbett, Correa, Cox,  
  Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh,  
  Florez, Floyd, Frusetta, Gallegos, Havice, Hertzberg,  
  Honda, House, Jackson, Keeley, Knox, Kuehl, Leach,  
  Lempert, Leonard, Longville, Lowenthal, Machado, Maddox,  
  Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano,  
  Olberg, Oller, Robert Pacheco, Papan, Pescetti, Reyes,  







                                                      SB 177
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  Romero, Scott, Shelley, Soto, Steinberg, Strickland,  
  Strom-Martin, Thompson, Thomson, Torlakson, Vincent,  
  Washington, Wayne, Wiggins, Wildman, Wright, Villaraigosa
NOES:  Ackerman, Baldwin, Battin, Brewer, Briggs, Granlund,  
  Kaloogian, Rod Pacheco, Runner, Zettel
NOT VOTING:  Aroner, Bock, Cardenas, Wesson


NC:cm  9/10/99   Senate Floor Analyses 

               SUPPORT/OPPOSITION:  SEE ABOVE

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