ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
AMENDED
eminent domain; existing contracts
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, unless certain conditions are met.
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).
The Joint Legislative Budget Committee (JLBC) fiscal note estimates that the bill would have no fiscal impact on the state (JLBC fiscal note).
Provisions
1. Requires a municipality that acquires a public utility business or enterprise by eminent domain to assume the existing assets and contractual obligations directly associated with providing current and future utility service in the condemned certificate of convenience and necessity that is being condemned, unless:
a) the municipality and all parties to the contractual obligation agree otherwise;
b) a municipality assuming the contractual obligation would be contrary to law;
c) the contractual obligation being assumed is between the public utility and one or more of its affiliates; or
d) the municipality currently provides the service that is subject to the contractual obligation being assumed and extending service to the area being condemned would be less expensive over the remaining term of the contractual obligation than assuming the contractual obligation; or
e) the contractual obligation was executed on or after the date the municipality provided the public utility business with a written purchase offer and appraisal.
2. Defines affiliate, contractual obligation and utility service.
3. Contains an applicability clause specifying that the requirements relating to contractual obligations associated with utility service are applicable only to condemnation actions that commence after the general effective date.
4. Makes technical changes.
5. Becomes effective on the general effective date.
Amendments Adopted by Committee
Specifies that the requirements relating to contractual obligations associated with utility service are applicable only to condemnation actions that commence after the general effective date.
Amendments Adopted by Committee of the Whole
1. Specifies that a municipality is not required to assume a contractual obligation associated with providing current and future utility service if:
a) a municipality assuming the contractual obligation would be contrary to law;
b) the contractual obligation being assumed is between the public utility and one or more of its affiliates; or
c) the municipality currently provides the service that is subject to the contractual obligation being assumed and extending service to the area being condemned would be less expensive over the remaining term of the contractual obligation than assuming the contractual obligation.
2. Defines affiliate and contractual obligation.
3. Makes technical changes.
House Action Senate Action
COM 1/19/21 DP 7-3-0-0 GOV 3/8/21 DPA 5-3-0
3rd Read 2/4/21 34-24-0-1-1
Prepared by Senate Research
May 24, 2021
MH/gs