Notwithstanding the public backlash following the U.S. Supreme Court’s ruling in Kelo v. City of New London several years back, government agencies are getting more and more creative with stretching reasons to support exercising eminent domain. The city government of Claremont, California is attempting to take over a private water company using eminent domain and justifies its attempts by claiming that the residents are unhappy with their water bills.

Claremont’s “solution” is to take the water company. A municipal utility is nothing new. But taking an already existing private utility is suspect and a potentially flawed plan. The residents are not certain about how the City would go about paying the offer of $55 million to Golden State Water Company and they definitely do not have reassurance that the pricing difference will benefit them. But, putting aside those concerns, there is a bigger issue lurking mischievously in the background. Is it really appropriate for a government agency take a private business away from its owners simply because some customers of the business are allegedly unhappy with their bills?

According to Claremont, they have good reasons for seeking to use eminent domain to replace the private water company. The fact that people are unhappy, however, may not be enough. The rules of eminent domain allow, under the U.S. and California Constitution, for the government to take private property for public use by paying just compensation.

In addition, California Code of Civil Procedure § 1240.030 requires:

The power of eminent domain may be exercised to acquire property for a proposed project only if all of the following are established:

(a) The public interest and necessity require the project.
(b) The project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury.
(c) The property sought to be acquired is necessary for the project

While a utility can amount to a public use, here the utility already exists and is privately owned. It is questionable whether Claremont meets the Constitutional “public use” requirements, as well as the requirements of “necessity” set forth in CCP § 1240.030. Moreover, given that the Howard Javis Taxpayers Association estimates the value of the business at $200 million, it is questionable whether the City’s $55 million offer will ultimately amount to just compensation even if the City is allowed to move forward with the taking.

We’ll have to stay tuned to see how this one plays out.

By A.J. Hazarabedian

To learn more about A.J. Hazarabedian, please visit http://www.eminentdomainlaw.net/aboutAJH.php.