Eminent Domain Report

Both California and federal eminent domain laws set forth obligations on "public entities" or the "government."   When these specific terms are used, do the statutes also apply to public or private utility companies exercising the power of eminent domain?

One example is found in the Uniform Relocation Assistance and Real Property Acquisition Policies Act, which allows a landowner to seek reimbursement for costs and attorneys' fees when a condemnation action instituted by a "federal agency" is abandoned by the "United States."  (42 U.S.C. 4654.)  If a utility company institutes an eminent domain action pursuant to the authority of a federal agency, does the statute equally apply to the utility company?

According to a recent 9th Circuit opinion, the answer is apparently no.  In Transwestern Pipeline Company v. 17.19 Acres of Property, a private utility company obtained permission from the Federal Energy Regulatory Commission (FERC) to construct a natural gas pipeline across about 900 acres of property.  When one landowner aggressively fought the eminent domain action, the utility company changed the alignment to avoid that property and essentially abandoned the condemnation.  When the property owner sought recovery of its costs and attorneys' fees under the above Relocation Act statute, the court concluded that the private utility company was not bound  by the statute, and therefore the owner was not entitled to an award of costs and fees.

While the Transwestern Pipeline case only addresses one particular statute in the Relocation Act, the holding could arguably be applied more broadly.  For example, California Code of Civil Procedure section 1263.025 requires a "public entity" to offer to pay up to $5,000 for the property owner to obtain an independent appraisal.  A literal reading of the statute suggests this requirement does not apply to utilities exercising the power of eminent domain, but the issue has not been decided by the courts.  In the future, utility companies could point to the Transwestern Pipeline case in support of this interpretation in an effort to avoid paying the $5,000 appraisal reimbursement.