In Re Puget Sound Power and Light Company: Eminent Domain by Corporations Reevaluated

• Publication year: 1982
• Citation: Vol. 6 No. 01

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 6, No.1FALL 1982

CASENOTES

In re Puget Sound Power and Light Company: Eminent Domain by Corporations Reevaluated

Julie Anderson

In the case of In re Puget Sound Power and Light Co.,(fn1) the Washington Court of Appeals rejected the arbitrary and capricious standard of judicial review for determinations of public use(fn2) and necessity(fn3) by private corporations in eminent domain proceedings.(fn4) Recognizing that deferential judicial review is inappropriate when the condemnor is a private entity, the court held that due process requires a private condemnor to prove public use and necessity by a preponderance of the evidence.(fn5) Although the court correctly shifted the burden of proof to the condemnor, the court could have grounded its decision in the Washington procedural statute governing corporate condemnation(fn6) and avoided the constitutional question. Despite misleading case law,(fn7) the wording of the corporate condemnation statute(fn8) differs significantly from statutes governing public entities.(fn9) Courts should interpret the statute for corporations to require strict judicial supervision of the eminent domain actions of private entities.

Puget Sound Power and Light Company (PPL), a private utility,(fn10) attempted to purchase an easement for an electrical transmission line across Kenneth and Carolyn Jauch's property. When the Jauchs refused to sell, PPL filed a condemnation petition(fn11) in superior court pursuant to the statute for corporate eminent domain.(fn12) At the hearing,(fn13) the Jauchs argued that PPL could place the new power lines across the road where PPL already had franchise rights.(fn14) PPL contended the condemnation was necessary because of safety factors, engineering practices, and cost.(fn15) After inspecting both sites, the trial court found that PPL's determination of public use and necessity was not arbitrary and capricious(fn16) and entered a condemnation decree in favor of the utility. The Jauchs appealed, contending that the trial court erroneously applied the arbitrary and capricious standard of review to PPL's determination of necessity.

The Washington Court of Appeals(fn17) recognized that courts traditionally review a determination of necessity deferentially because of the legislative nature of the determination.(fn18) Courts have uniformly characterized condemnation decisions as legislative because eminent domain is an inherent sovereign power(fn19) limited only by express constitutional provisions.(fn20) Additionally, a condemnor is better qualified than a court to make technical decisions regarding the necessity and location of a public project. Although the doctrine of separation of powers limits judicial interference with legislative functions,(fn21) due process requires that legislative acts be rationally related to a legitimate public purpose.(fn22) Deferential review ensures, without encroaching on legislative prerogatives, that legislative decisions meet minimum standards of substantive due process.(fn23)

A private corporation is not a legislative decisionmaker entitled to judicial deference. While most authorities conclude that a legislative delegation of eminent domain power includes a grant of discretion to determine the necessity of the taking,(fn24) under the Puget court's analysis, the legislative source of power does not determine the character of the grantee's decision. The Puget court looked behind the decision's traditional legislative label and examined the character of the decisionmaker. Unlike a private corporation, the state or public condemnor exercises discretion as a public representative(fn25) in condemning land for a public project. Theoretically, public officials have no self interest in the ultimate governmental decision reached. In addition, the ballot box imposes political constraints on public decisionmakers. Washington's Open Public Meetings Act(fn26) further mandates that meetings of the governing body of any public agency be open to public attendance. These safeguards justify deferential review of the eminent domain decisions of public entities.

PPL's decisionmakers, on the other hand, represent the interests of the corporation. They are not required to be responsive to the public's concerns during the decisionmaking process,(fn27) nor have they been accountable to the public for their condemnation decisions through the political process. Judicial review, therefore, is the only safeguard against abusive exercises of eminent domain power when the condemnor is a private corporation.

When judicial review is the only safeguard against oppressive exercises of eminent domain power, the arbitrary and capricious standard of review is inappropriate. The arbitrary and capricious standard places the burden of proof on the condemnee.(fn28) Without proof of actual or constructive fraud in the condemnor's determination of necessity, the standard precludes a court from denying a condemnation petition.(fn29) The condemnor's decision is, therefore, conclusive in most cases.(fn30)

In Puget, for example, the Jauchs raised a serious question about the necessity of condemning their property (fn31) hut were unable to overcome the strong presumption in favor of PPL provided by the deferential standard. Effective judicial review protecting landowners against unnecessary condemnation, is prevented by this strong presumption in favor of the condemnor.

In addition, arbitrary and capricious review is inappropriate because limited judicial review presumes the existence of a record for the trial court to review.(fn32) When a public entity exercises eminent domain power, a legislative or administrative proceeding(fn33) generally precedes the superior court hearing. Corporate condemnors, on the other hand, make their decisions privately and are not required to compile a record for review. In a private condemnation, the trial court functions as a factfinder, considering evidence for and against condemnation, and cannot properly be characterized as a reviewing body.

Because a private corporation is not a legislative decisionmaker, and because there is no proceeding prior to superior court action, limited judicial review is not justified. A private condemnor should be required to prove public use(fn34) and necessity by a preponderance of the evidence.

In Puget, the trial court received evidence for and against condemnation of the Jauch property. Both sides presented expert testimony.(fn35) The trial judge inspected the Jauch property and the alternative site.(fn36) Equipped with this evidence, the trial court was fully capable of making a determination based on the weight of the evidence. PPL's determination of necessity was entitled to consideration as expert testimony rather than as a conclusive presumption. The court of appeals, therefore, properly remanded the case for findings on whether PPL demonstrated public use and necessity by a preponderance of the evidence.(fn37)

Although the Puget court correctly rejected the arbitrary and capricious standard of review, the court based its reasoning on an unusual and inadequately explained application of due process principles.(fn38) The court suggested that deferential review of PPL's preliminary determinations violated due process because there was no prior opportunity for the Jauchs to be heard.

The Puget court cites two Washington cases for its due process holdings.(fn39) These impoundment and seizure cases both apply procedural due process principles derived from the fourteenth amendment of the federal Constitution. Generally, due process requires a meaningful hearing appropriate to the circumstances prior to any significant deprivation of property.(fn40) When it invoked due process principles derived from criminal procedure cases, however, the Puget court failed to recognize that eminent domain is a unique area of the law.

Eminent domain case law is uniform in holding that due process does not require a hearing on the issue of necessity.(fn41) Determination of necessity is a legislative decision(fn42) and procedural due process principles are inapplicable to legislative acts or decisions (fn43) Because courts have not traditionally distinguished between public and private condemning entities,(fn44) no precedent supports a due process analysis based on the condemnor's identity.(fn45)

The Puget court distinguished between public and private condemnors and recognized that additional procedural protection is appropriate when the condemnor is a private corporation. Since a private corporation is not a public representative and lacks public accountability, PPL's determination that the Jauch property was necessary was not functionally a legislative decision.(fn46) The decision was, however, a substantial step towards depriving the Jauchs of the unencumbered use of their property. Therefore, if properly invoked, procedural due process may conceivably require judicial supervision to insure that the determination of necessity is made on a principled basis.(fn47)

The arbitrary and capricious standard of review with its strong presumption of validity in favor of the condemnor does not afford landowners much procedural protection when the condemnor is a private corporation.(fn48) A preponderance of the evidence burden of proof, on the other hand, provides a more meaningful public use and...