A statewide November California ballot measure aimed at curbing eminent domain powers (Proposition 90) threatens to have “significant impacts” on the California Public Utilities Commission (CPUC) and the private-sector utilities that it regulates, CPUC President Michael Peevey said Thursday during a review of the measure by the regulatory panel’s chief counsel.
<>The state measure is a reaction to a recent U.S. Supreme Court decision upholding a Connecticut city’s use of eminent domain to acquire private property for economic development purposes. Organized opposition to the ballot measure describes Prop 90 as one that is “disguised as an eminent domain” proposition, but will actually result in billions of dollars of higher taxes for Californians.
Utilities generally have broad eminent domain powers, although the California law is “quite different” than what was at stake in the Connecticut case, CPUC Chief Counsel Randy Wu said. In California, eminent domain can be used for economic development in a blighted area, but not in a more general way as it was in Connecticut, he said.
The CPUC legal division’s analysis concluded that Prop 90 has “potential significant impacts on the cost of utility infrastructure,” Wu told the five-member CPUC. The regulators agreed to wait until the CPUC’s Sept. 21 meeting to vote on whether to take an active position opposing the measure and encouraging the private-sector utilities to do the same. The ballot measure is “complex and not altogether clear what it intends to accomplish,” he said.
Among the issues that Prop 90 raises is the question of how the property being taken is valued, and the use of other criteria than the common “fair market value” test. Thus, the CPUC’s analysis concluded the cost of acquiring property through eminent domain could go up for utilities. There also may be related costs of damages that would be claimed by adjoining private property owners if they can prove “substantial economic harm,” Wu said.
The California ballot measure includes a phrase that attempts to exempt CPUC decisions affecting rates from being covered by the new law if it wins voter approval, but Wu said it is not clear how broadly this applied.
“At minimum, it is fair to say that Prop 90 carries the potential for substantial added litigation (involving the utilities) that could result in substantially higher costs,” Wu told the CPUC commissioners in response to their questions.
Commissioner Dian Grueneich, the CPUC assigned commissioner on a number transmission-related cases, said she is concerned that if Prop 90 passes, “we could have litigation that would cause a lot of uncertainty in the ability to proceed with new transmission projects, and perhaps even delay them, if the litigation leads to court injunctions. It could impact our ability to put in place new energy infrastructure we have determined is needed in California.”
Wu said an example of how Prop 90 could cloud the litigation process is the fact that the measure would designate juries — not judges as is the current practice — to determine if eminent domain requests have a legitimate public purpose. “It is provisions like this that raise concerns,” Wu said.
Peevey said he thinks it is appropriate for the CPUC to take a position on the issue.
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