BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 177| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 SB 177 Page 2 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. SB 177 Page 3 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 SB 177 Page 4 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 SB 177 Page 5 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 SB 177 Page 6 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 SB 177 Page 7 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 Page 8 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 **** END ****