A Case Study For California Cities In Water Utility Takeovers

Brad Kuhn and James Oleshansky authored the article “A Case Study For Calif. Cities In Water Utility Takeovers” for Law360. The article begins:

“After more than a year of sustained high levels of precipitation, the National Oceanic and Atmospheric Administration is projecting a shift from El Niño to its climate counterpart, La Niña. La Niña is expected to develop this summer and typically lasts nine to 12 months.

After the 2023 rain year – California's 10th wettest since recordkeeping began 128 years ago – La Niña signals a big shift for the state toward a drier climate. California's three driest years on record, 2020 through 2022, were La Niña years.

In the face of this kind of water scarcity, some city and county governments in California have turned to using the power of eminent domain to acquire investor-owned utilities, or IOUs, through condemnation, under the theory of improving water service and costs for their communities.

This process of a government acquiring an IOU is called municipalization. Municipalization of IOUs through eminent domain, however, is more difficult than traditional condemnation – because IOUs have the right to contest the government's findings authorizing the use of their eminent domain powers.”

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