Opinion ID: 1887718
Heading Depth: 2
Heading Rank: 4

Heading: Special Privileges

Text: The trial court held that the Act, which grants a legislative franchise to electric suppliers for the assigned territories they serve, [16] violates § 22 of the Constitution of Alabama of 1901 by affording private corporations exclusive privileges, or franchises, that are not in the public interest. The Proponents argue that by granting legislative franchises the Act assigns service territories for the public purpose of preventing costly duplication of electric-distribution facilities. They further contend that the assigned service territories are revocable under § 22 and thus do not render the Act unconstitutional. The Opponents argue that the Act's assignment of exclusive service territories for private corporations is a clear violation of § 22 of the Alabama Constitution. Section 22 of the Alabama Constitution prohibits the grant of an irrevocable franchise, by providing in pertinent part: [N]o ... law ... making any irrevocable or exclusive grants of special privileges or immunities, shall be passed by the legislature; and every grant or franchise, privilege, or immunity shall forever remain subject to revocation, alteration, or amendment. [17] (Emphasis added.) For almost a century this Court has recognized that while § 22 does prohibit the grant of an irrevocable franchise, it does not prohibit the grant of a revocable special exclusive privilege ... awarded ... for the convenience and benefit of the public, and it has stated, If this doctrine be not correct, then the State can make no contract for ... any ... work of [a] public-utility.... Dickinson v. Cunningham, 140 Ala. 527, 543-44, 37 So. 345, 349 (1904). While every grant of a certificate of need or franchise to a public-utility, or a similar business, is exclusive to some degree, such a legislative grant is not impermissibly exclusive under § 22 because the Legislature is free to include other service providers in a given service area, thereby revoking the exclusivity, or monopoly, feature of the grant: `While [the Legislature] may grant special privileges and immunities to build ... works of public-utility, and by a failure to duplicate a grant make it in effect for the time being exclusive, yet no Legislature can forestall action by a succeeding Legislature, or bind the state by making the grant in terms exclusive.... [E]ven if exclusive privileges were granted, the monopoly feature thereof should always be subject to revocation.' Town of New Decatur v. American Tel. & Tel. Co., 176 Ala. 492, 552-53, 58 So. 613, 632 (1912) (Sayre, J., concurring) (interpreting the predecessor of § 22 and quoting Bienville Water Supply Co. v. City of Mobile, 186 U.S. 212, 223, 22 S.Ct. 820, 46 L.Ed. 1132 (1902)). This Court has recognized that § 22's mandate that any franchise be subject to revocation is incorporated into statutes and ordinances by operation of law. Town of New Decatur, 176 Ala. at 546-47, 58 So. at 630. [18] Indeed, we have specifically recognized, with respect to public utilities providing electric service, that the State ... has the power to ... authorize [them] to conduct their business in a particular area of the State.  Alabama Power Co. v. Citizens of the State of Alabama, 527 So.2d 678, 683 (Ala.1988) (emphasis added). Accordingly, we hold that the Act's assignment of particular service territories advances the legislatively determined public interest of preventing duplication and does not grant irrevocable exclusive franchises in violation of § 22.