TIME TO RE-EXAMINE EMINENT DOMAIN PROCESS; BROADER SAFEGUARDS SHOULD BE IN PLACE ON ALL INVESTOR-OWNED PUBLIC UTILITIES.
In a democracy, a constant tension exists between private rights and the general public good.
When the private property involves real estate, the legal process of eminent domain is used by the government and a few special segments of the private sector to force private owners to sell their property through a process known as ``condemnation.''
Homes, property or a portion of property can be condemned for the greater society's good.
Both the civil courts and the so-called ``court of public opinion'' can be employed to enforce eminent domain. As important as this societal ``tool'' is in both protecting private owners' investments and the public's needs, today's fast-paced global economy means our state and nation should re-examine how eminent domain is applied and who gets to apply it.
A case in point in California involves a multibillion-dollar investor-owned public utility, state energy regulators and several hundred single-family homeowners.
Public utilities - because of their historic special status as legalized monopolies providing basic societal needs, i.e. electricity, natural gas, telephone service - hold the power of eminent domain as it relates to their operations.
An independent report prepared for the consumer services branch of the California Public Utilities Commission charges that Los Angeles-based Southern California Gas Co., the nation's largest gas utility, abused its power of eminent domain to force several hundred homeowners to sell their property and mineral rights to part of a depleted oil field. The gas utility had operated an underground gas storage on the field for more than 40 years under a long-term lease agreement.
Since the natural gas and electricity industries began deregulating, SoCal Gas Co. has alternately stopped operating and started to sell its interest in the underground storage field in the suburb of Montebello, about 12 miles southeast of downtown Los Angeles.
The commission report alleges that the utility talked out of both sides of its mouth, and on the one side misused its eminent domain powers.
Before, during and after applying for regulatory permission to sell the underground storage operation, the report alleges that the gas company was applying eminent domain in the courts from 1996 through 1998 to obtain the last remaining landowners' ownership and mineral rights.
The utility claimed in court that the rights were needed for utility operations at the storage field. During 1996, the gas company allegedly was conducting environmental assessments and cleanup reports as part of an expressed ``preparation for sale'' of the Montebello operations.
The company could face some stiff fines from state regulators, but it is not clear that it faces any penalties regarding its use of eminent domain.
But even if there are no punitive actions, the case should prompt regulators and state legislators to re-examine laws related to private sector utilities' powers of eminent domain.
It seems clear from the facts developed so far in the state PUC investigation that the gas utility was pushed in opposing directions. On the one hand, increasing pressures to maximize its operating efficiencies dictated that the storage field be shut down. On the other hand, financial pressure to maximize revenues pressed the utility to try to reap the maximum financial gains from its 40-plus years operating the field.
A utility with these competing private sector pressures - particularly in today's deregulated world - should not have the public power of eminent domain. At minimum, a third-party check-and-balance should be instituted. Or the state regulatory bodies overseeing the investor-owned utilities should decide themselves whether and when eminent domain is used by one of the companies it regulates.
Regulators are in the better position to determine if the property proposed for condemnation is, in fact, essential for the utility to carry out its regulated monopoly function.
The privately held utilities certainly should not be trusted with making an unbiased determination. Ultimately, broader safeguards should be put in place that apply to all investor-owned public utilities.
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Aug 15, 1999|
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