California Eminent Domain Report

One of the oddities of California's public utility system is that private companies own and operate many of them, yet they behave very much like governmental entities, especially when it comes to eminent domain.  Major examples include Southern California Edison and Pacific Gas & Electric ("PG&E"); both are private companies functioning as public utilities, delivering electricity to their constituents, and both are overseen by the Public Utilities Commission. 

Occasionally, an actual governmental entity will seek to replace the private utility company.  Such is the case with the South San Joaquin Irrigation District ("SSJID"), which is exploring the option of acquiring some PG&E facilities in an effort to reduce the cost of providing electricity to customers in Manteca, Ripon, and Escalon.  According to Manteca Bulletin Managing Editor Dennis Wyatt, in his October 26 article "LAFCO legal study key to SSJID:  May decide who powers South County economy," SSJID is seeking to acquire PG&E's power infrastructure in the area for $79.5 million, though PG&E claims its facilities are worth more than $300 million. 

One of the key issues in the dispute is whether SSJID can -- or should -- exercise the power of eminent domain to condemn PG&E's facilities if the parties cannot reach an amicable agreement.  Mr. Wyatt's article also notes that SSJID has focused some attention on the irony of PG&E objecting to the use of eminent domain:

The SSJID has said if eminent domain does become an issue it will only be between the district and PG&E. The SSJID also notes PG&E uses eminent domain to take property it wants for everything from power lines to substations when people do not want to sell.

The matter is likely to go before the San Joaquin County Local Agency Formation Commission sometime in Spring 2010.  If the Commission decides that SSJID has the authority to enter the retail power business, the real battle between SSJID and PG&E may ensue, and eminent domain attorneys may find themselves at the heart of the battle.