Eminent Domain Report

In 2024, we reported on a significant published appellate decision, South San Joaquin Irrigation District v. PG&E, which concluded that when a public agency uses eminent domain to acquire the assets of an electric, gas, or water utility, the court can exercise its independent judgment in determining whether the agency’s acquisition satisfies the public use and necessity requirements. The decision provided guidance on the standard of review and the limited level of deference given to public agencies in their decision-making on such utility take-overs.

Recently, a different California Court of Appeal, in Town of Apple Valley v. Apple Valley Ranchos Water, was presented with the same issue and reached a conflicting conclusion. In Town of Apple Valley, the Court held that the trial court should apply a deferential standard of review of agency findings in utility takings cases and should uphold the public agency’s resolution of necessity if it is supported by any substantial evidence. In other words, the court should not exercise its independent judgment, but instead only determine whether the public agency’s findings of necessity were a gross abuse of discretion. The Court in Town of Apple Valley also restricted the court’s review of information that existed at the time the resolution of necessity is adopted, meaning neither the public agency nor the utility can introduce new information or evidence as to the public use and necessity findings.

With these conflicting Court of Appeal decisions, public agencies and utilities are presented with a direct conflict on the proper interpretation of Eminent Domain Law in actions seeking to take privately owned utility property for public use. We anticipate the Town of Apple Valley decision will be submitted to the California Supreme Court for review and given the state-wide importance of the issue, along with the conflicting Court of Appeal holdings, there is a relatively good chance the Supreme Court may accept the case to clarify the conflicting opinions (we hope they do). 

If the Supreme Court takes up the case, it will be asked to clarify (i) whether utilities may rebut local governments’ administrative findings with extrinsic evidence at trial and (ii) whether trial courts, sitting as triers of fact, may decide questions of public necessity and more necessary public use in utility takings cases de novo (versus a deferential standard of review). California Code of Civil Procedure 1245.250(b) provides that a resolution of necessity adopted by a condemning entity to acquire the property of an electric, gas, or water utility creates only a rebuttable presumption of truth, so the Court will be asked to determine what this statutory language means. 

Utility takings cases present important questions of law because they concern both the taking of private property and the provision of vital services to the public. Let’s hope the Supreme Court takes the opportunity to address this critical question and resolves the conflicting Court of Appeal decisions.