ARIZONA STATE SENATE

LAURA BENITEZ

LEGISLATIVE RESEARCH ANALYST

COMMERCE COMMITTEE

Telephone: (602) 926-3171

RESEARCH STAFF

 

 

TO:                  MEMBERS OF THE SENATE

                        COMMERCE COMMITTEE

DATE:            February 1, 2021

SUBJECT:      Strike everything amendment to S.B. 1154, relating to existing contracts; eminent domain


 


Purpose

            Requires a municipality acquiring a public utility business or enterprise by eminent domain to assume all existing assets and contractual obligations directly associated with providing utility service in the condemned certificate of convenience and necessity.

Background

The state or a county, city, town, village or political subdivision may exercise the right of eminent domain to take property by condemnation for statutorily outlined uses (A.R.S. Title 12, Chapter 8). An action for taking property by condemnation must be brought as a civil action in superior court. At least 20 days before filing an action, the plaintiff must deliver to the property owner a written offer to purchase the property and pay just compensation and at least one appraisal supporting the proposed compensation amount (A.R.S. § 12-1116).

            A municipality may exercise the right of eminent domain to construct, purchase, acquire and own: 1) a public utility business or enterprise for which the municipality may issue a franchise; and 2) real property for public utility purposes. A municipality may establish, lay and operate a plant, electric line or pipeline on any land or right-of-way taken under eminent domain (A.R.S.
§ 9-511
).

            The Arizona Corporation Commission issues certificates of convenience and necessity to public service corporations upon approving an application that includes evidence that the proper public authority granted the required consent, franchise or permit (A.R.S. § 40-282).

            There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1.   Requires a municipality that acquires a public utility business or enterprise by eminent domain to assume the existing assets and contractual obligations associated with providing current and future utility service in the condemned certificate of convenience and necessity, unless all parties to the contractual obligations agree otherwise.

2.   Deems, as void and against public policy, a contract that a condemned utility enters into in bad faith and to impede the condemnation within 60 days of receiving a municipality's purchase offer.

3.   Makes technical changes.

4.   Becomes effective on the general effective date.