Article 1. Manner Of Granting of California Public Utilities Code >> Division 3. >> Chapter 1. >> Article 1.

Every franchise or privilege to erect or lay telegraph or telephone wires, to construct or operate street or interurban railroads upon any public street or highway, to lay gas pipes for the purpose of carrying gas for light, heat, or power, to erect poles or wires for transmitting electricity for light, heat, or power, along or upon any public street or highway, or to exercise any other privilege whatever proposed to be granted by the governing or legislative body of any county, city and county, or city shall be granted upon the conditions in this article provided, and not otherwise, except when such franchises are granted pursuant to Chapters 2 or 3 of this division. This article does not apply to franchises or privileges for railroads, or telegraph or telephone lines doing an interstate business, or to renewals of franchises for piers, chutes, or wharves, or to community antenna television systems, or to franchises or privileges for purposes not involving the furnishing of any service or commodity to the public or any portion thereof.

(a) All franchises, licenses, permits, or other privileges granted to a public utility by any city, county, or city and county holding a freeholder's charter, to use, or to construct, or lay and use, under, along, across, or upon the public streets, ways, alleys, and places within the municipality, facilities which are part of a pipeline system transmitting oil or products thereof, shall be granted upon the terms and conditions provided in, and in accordance with, this chapter or Chapter 2 (commencing with Section 6201).
  (b) It is the intent of the Legislature, in enacting this section, to preempt the ordinance of any chartered municipality insofar as that ordinance governs the granting of franchises to construct facilities which are part of a pipeline system transmitting oil or other products thereof.

The grantor may, in such a franchise, impose such other and additional terms and conditions not in conflict with this article, whether governmental or contractual in character, as in the judgment of the legislative body thereof are to the public interest.

No clause or condition of any kind shall be inserted in any franchise or grant offered or sold under the terms of this article which shall directly or indirectly restrict free and open competition in bidding therefor, and no clause or provision shall be inserted in any franchise offered for sale, which shall in anywise favor one person, firm, or corporation, as against another, in bidding for the purchase thereof.

An applicant for a franchise or privilege shall file with the governing or legislative body of the county or municipality an application, and thereupon that body shall, in its discretion, advertise the fact of the application, together with a statement that it is proposed to grant the franchise or privilege, in one or more newpapers of the county, city and county, or city wherein the franchise or privilege is to be exercised.

The advertisement shall state that bids will be received for the franchise and that it will be awarded to the highest bidder. The advertisement shall be published once a day for 10 successive days, or as often during that period as the paper is published, if it is a daily newspaper. If there is no daily newspaper published in the county, city and county, or city, it shall be published in a weekly newspaper once a week for four successive weeks. In either case the full publication shall be completed not less than 20 nor more than 30 days before any further action can be taken thereon.

The publication shall state the character of the franchise or privilege proposed to be granted, the term for which it is granted, and, if it is for a street railroad, the route to be traversed; that sealed bids therefor will be received up to a certain hour and day named therein, and that the successful bidder and his assigns shall during the life of the franchise pay to the county or municipality two percent (2%) of the gross annual receipts of the grantee arising from the use, operation, or possession of the franchise.

The advertisement shall also contain a statement that the franchise will be struck off, sold, and awarded to the person, firm, or corporation making the highest cash bid therefor; that at the time of the opening of the bids any responsible person, firm, or corporation present or represented may bid for the franchise or privilege a sum not less than 10 percent above the highest sealed bid therefor, and the bid so made may be raised not less than 10 percent by any other responsible bidder and the bidding may so continue until the franchise is finally struck off, sold, and awarded to the highest bidder therefor in lawful money of the United States.

Each sealed bid shall be accompanied with cash or a certified check payable to the treasurer of the county or municipality for the full amount of the bid, and no sealed bid shall be considered unless the cash or check is enclosed therewith. The successful bidder shall deposit at least 10 percent of the amount of his bid with the clerk of the county or municipality before the franchise is struck off to him. If he fails to make the deposit immediately his bid shall not be received, and is void, and the franchise shall then and there be again offered for sale to the bidder who makes the highest cash bid therefor, subject to the same conditions as to deposit. This procedure shall be had until the franchise is struck off, sold, and awarded to a bidder who makes the necessary deposit of at least 10 percent of the amount of his bid.

The successful bidder shall deposit with the clerk of the county or municipality, within 24 hours of the acceptance of his bid, the remaining 90 percent of the amount thereof. If the bidder fails to deposit with the clerk of the county or municipality the remaining 90 percent of his bid within 24 hours after its acceptance, the award to him of the franchise shall be set aside, the deposit made by him shall be forfeited, and no further proceedings for a sale of the franchise shall be had unless it is readvertised and again offered for sale in the manner provided in this article.

(a) The advertisement may also contain a statement that the successful bidder for any franchise or privilege struck off, sold, and awarded under this article shall file a bond running to the county, city and county, or city, approved by the governing body. The advertisement may require a bond executed by an admitted surety insurer. The bond shall be in a penal sum prescribed by the governing body and set forth in the advertisement for bids, and conditioned that the bidder shall well and truly observe, fulfill, and perform each term and condition of the franchise, and that in case of any breach of condition of the bond, the whole amount of the penal sum therein named shall be deemed to be liquidated damages.
  (b) The bond if required shall be filed with the governing body within the time specified in the advertisement and if no time is specified within five days after the franchise is awarded. The franchise shall be granted by ordinance to the person, firm, or corporation to whom it has been struck off, sold or awarded. If the bond is not filed within the time required, the award of the franchise may be set aside at any time prior to the filing and, if set aside, any money paid for the franchise shall be forfeited, and if an ordinance has been enacted granting the franchise, the governing or legislative body may repeal the ordinance and the franchise shall, in the discretion of the governing or legislative body, be readvertised and again offered for sale in the same manner and under the same restrictions, as provided in this article.

Notwithstanding any other provision of this article, any franchise heretofore or hereafter granted shall not be invalid or subject to revocation because the bond required by law at the time of the award of such franchise shall not have been filed within the time then prescribed, provided the bond is filed prior to the setting aside of the award or, as the case may be, the repeal of the ordinance granting such franchise.

If the franchise is a renewal of a right already in existence, payment of the percentage of gross receipts shall begin at once upon the granting of the franchise. If the franchise is not a renewal of a right already in existence, no percentage shall be paid for the first five (5) years succeeding the date of the franchise, but thereafter the percentage shall be payable annually. If payment is not made, the franchise shall be forfeited.

If the franchise granted is an extension of an existing street railroad system, the gross receipts shall be estimated to be one-half of the proportion of the total gross receipts of the system which the mileage of this extension bears to the total mileage of the whole system. This estimate is conclusive as to the amount of the gross receipts of the extension.

Work to erect or lay telegraph or telephone wires, to construct street or interurban railroads, to lay gas pipes for the purpose of carrying gas for light, heat, or power, to erect poles or wires for transmitting electricity for light, heat, or power, along or upon any public street or highway, or to exercise any other privilege whatever, a franchise for which has been granted pursuant to this article, shall be commenced in good faith within not more than four months from the granting of the franchise. If not so commenced the franchise shall be declared forfeited.

Work to construct street or interurban railroads shall be completed within not more than three years from the granting of the franchise, and if not so completed the franchise shall be forfeited. For good cause shown, the governing or legislative body may by resolution extend the time for completion, not exceeding three months.

Work under any franchise other than for a street or interurban railroad shall be prosecuted diligently and in good faith so as to meet and fill the reasonable needs of the inhabitants of the territory for the service of which the franchise is granted.

The Attorney General, upon the complaint of any county or municipality, or, in his discretion, upon the complaint of any taxpayer, shall sue for the forfeiture of any franchise granted under this article, for the noncompliance with any condition thereof.

Any member of a governing or legislative body of any county, city and county, or city, who, by his vote, violates or attempts to violate any of the provisions of this article is guilty of a misdemeanor and may be punished therefor as provided by law, and may be deprived of his office by the decree of a court of competent jurisdiction, after trial and conviction.