California SB 875 Stalls in Senate, Halting Effort to Reform Utility Asset Takings

California Senate Bill 875 (“SB 875”) recently stalled in the Senate, likely killing the measure. After the Senate Judiciary Committee passed the bill on April 14, 2026, the Senate Energy, Utilities and Communications Committee rejected the bill on a 4–1 vote.

The bill would have changed the legal standard used when a public agency seeks to take investor-owned utility assets, including altering the legal standard for evaluating whether the taking of public utility property within Pacific Gas & Electric Company’s service area is in the public interest. Under current law, when a public agency adopts a resolution of necessity to initiate a taking of public utility property, the resolution creates only a rebuttable presumption that the taking is in the public interest. SB 875 would have changed that standard for electric and gas public utility properties within PG&E’s service area, such that a public agency resolution of necessity would “conclusively establish” that the taking is in the public interest.

Opponents raised concerns that SB 875 would create operational fragmentation within utility systems and introduce additional financial and regulatory uncertainty.

SB 875’s failure means the current legal framework governing the municipalization of investor-owned utilities remains in place. 

Another important municipalization question is still pending decision by the California Supreme Court. In Town of Apple Valley v. Apple Valley Ranchos Water, the Court will resolve a split in district court decisions and establish the standard of review for municipalization cases. In Town of Apple Valley v. Apple Valley Ranchos Water, the Fourth District Court of Appeal interpreted the standard of review differently than the Third District Court did in Pacific Gas and Electric Company v. Superior Court. The California Supreme Court granted Apple Valley Ranchos Water’s petition for review to resolve the following issue:

• When a public entity files an eminent domain action seeking to take privately held public utility property, and the owner objects to the right to take, what is the proper standard of judicial review for the trial court to apply to determine whether the property owner has rebutted the presumptions under Code of Civil Procedure sections 1245.250, subdivision (b) and 1240.650, subdivision (c)?

The matter was heard by the Supreme Court on June 3, 2026, and a decision is pending.