Posted on Wed, Mar. 16, 2005

Water-system takeover legislation draws ire

By VIRGINIA HENNESSEY
Herald Staff Writer

Two Central Coast groups, one in Monterey and another in Felton, say California American Water Co. is trying to block potential takeovers of local water systems through legislation that would rewrite the state's eminent domain laws.

Introduced by Assemblyman Juan Arambula, D-Fresno, the bill was written by the California Water Association, which represents 42 private water companies in the state, including Cal Am. As written, it would allow a public agency to acquire a private utility through eminent domain only if it could show that the company had "continually failed to comply with governing rules and regulations."

Representatives of local groups pursuing or contemplating takeovers of Cal Am water operations interpreted the bill as a direct attack.

"Who else but Cal Am would propose such a change?" asked Ron Weitzman, spokesman for Monterey Friends of Locally Owned Water (FLOW), a fledgling group examining the possibility of a public takeover of Cal Am's Peninsula water district. "The bill would be a big blow to the condemnation efforts of our local FLOW and any other group working toward the same end."

Jim Mosher, a spokesman for a related Felton FLOW group, was more emphatic. His group is trying to take over Cal Am's operations in the Santa Cruz Mountains.

"If this bill was to pass as currently written, our campaign would be over," said Mosher.

On Tuesday, the Santa Cruz County Board of Supervisors unanimously cleared the way for that campaign, announcing its intent to establish a community facilities district and to float a bond measure to acquire the Felton water system.

Cal Am spokesman Kevin Tilden denied that the bill was an effort to block takeovers in Monterey and Santa Cruz counties. It was written to address a growing trend of public takeovers, he said, citing recent attempts in Selma, Fresno and Claremont east of Los Angeles.

The Felton FLOW issued an "action alert" on its Web site on Monday, warning members that Cal Am, "a multinational water company, seeks state legislation to defeat local control efforts" and urging them to call Arambula to oppose the bill.

Arambula's office was flooded with calls. Faced with growing opposition from the Central Coast and elsewhere, the assemblyman stressed that he did not write the bill and agreed to introduce it on the condition that he would rewrite it. He said he plans to reduce the "burden of proof" on public agencies pursuing eminent-domain actions.

Still, continuing to alarm local FLOW groups, Arambula said he believes it is unfair for a private utility to have to defend itself from condemnation efforts by showing that its service is in the public's best interest.

"It flies in the notion of private property that Big Brother can come in and steamroller the little guy," he said, adding that the threat of such action would discourage smaller private utilities from investing in their infrastructure.

State law changes|

Until 1992, state law held that there was an absolute presumption that a public taking of a private utility was in the public's best interest. In 1992, because of efforts by the California Water Association, the law was changed to a "rebuttable" presumption, meaning the private utility could challenge it.

Arambula's bill would further reduce that presumption, requiring the public agency to show the taking was in the public's best interest because the private utility broke rules and regulations.

California Water Association President Palle Jensen confirmed that Cal Am played a role in drafting the legislation.

Tilden, who represents Cal Am on the association's council, said the bill was written by lawyers but reviewed by Cal Am.

Herman Fitzgerald, an eminent domain lawyer who helped the San Mateo County community of Montara acquire its water district from Cal Am in 2002, is consulting with both Central Coast FLOW groups. He said the bill was a "flagrant abuse of the political system."

"This legislation is so over-reaching it would completely preclude any public entity from condemning (a utility) for their purposes," he said. "I don't think that burden could ever be met."

Fitzgerald said water association lobbyist Meg Catzen, who has also lobbied on behalf of Cal Am, had been "shopping the bill all over" Sacramento, looking for a sponsor. So far Arambula was the only one to bite, and he's starting to regret it.

"I'm learning that there is no such thing as a 'simple, technical amendment without any significant opposition,'" the freshman assemblyman said, referring to Catzen's characterization of the bill.

Sierra Club opposed|

Jim Metropulos, a legislative representative for the Sierra Club in Sacramento, said that organization will likely oppose the bill. Public Citizen, a nonprofit group advocating public ownership of water utilities, is opposed to the bill as written, said spokeswoman Juliette Beck, but she was confident Arambula will rewrite the legislation before it is assigned to a committee later this month.

Arambula said he agreed to carry the bill because he opposes a threatened municipal takeover of a small private water company in Fresno. Bakman Water District owner Tim Bakman contributed $500 to Arambula's Assembly campaign.

Arambula also cited an attempted public takeover of the Selma water district, which is in his Assembly district and is owned by the California Water Service, which also owns the Salinas water system. That attempt was thwarted by public outcry.

The assemblyman said he will rewrite the bill -- which currently applies to water, gas and electric utilities -- to address only water utilities, and to reduce the public agency's burden of proof to a showing, "by the preponderance of the evidence," that the taking is in the public interest.

If the water association does not want to back those changes, he said, he will drop the bill.

Catzen, the lobbyist, said different standards should apply to a public taking of property for a road and the taking of a utility that is already serving the public.

"Yeah it is a tough standard," she said of Arambula's bill. "And I believe the reason we would like to see it is because you are, after all, taking property that is already dedicated to public use and using it for the same purpose. The standard should be higher."

Assemblyman John Laird, who represents the Felton and Peninsula areas, has contacted Arambula's office to object to the bill. While he has not come out in favor of a takeover of the Cal Am system in Felton, he said he does not want his constituents to lose their right to pursue it.

Arambula said he "would be willing to look at exemptions" to the bill.

The Monterey FLOW group is in the early stages of examining a Cal Am system takeover. Weitzman and group leader Peter Coniglio confirmed that the group has met with Fitzgerald and another attorney who assisted with the takeover of Montara's district. The group is also interviewing appraisers who would provide an initial assessment of the Monterey system's value.

Felton FLOW members said they are prepared for what will no doubt be a bruising election season, and don't want a change in eminent domain laws to throw a wrench in the works.

"We don't want the rules of the game changed at all half way through," said Graham. "It's going to be tough enough as it is. Cal Am is very aggressive and we expect a nasty, dirty campaign."