California Appellate Court Says Public Utility Must Pay to Relocate Pipelines to Make Way for Public Transportation Project

In a landmark victory for transportation agencies, the California Court of Appeal brought clarity to a recurring dispute between public agencies completing transportation improvements and public utilities since at least the 1860s. In its opinion issued Monday in Riverside County Transportation Commission v. Southern California Gas Company, the court summarized the questions at the heart of the dispute: “When it comes time to install or improve any one of these modern conveniences, what is to be done about another one that stands in its way? Can one force the other to relocate? And if so, who must pay for the relocation?” Based on a thorough analysis of dozens of cases from inside and outside of California, the Court of Appeal ultimately found that public utilities “can’t stand in the way of progress,” and, as such, they must bear the cost of relocating conflicting facilities.

This dispute arose when the RCTC determined that five Gas Company facilities would conflict with a 24-mile extension of Metrolink rail. RCTC sent a letter to the Gas Company informing it of the project and requesting that it relocate its facilities. The Gas Company refused. To advance the project, RCTC made an agreement where it would pay the Gas Company to remove, relocate and/or abandon its conflicting facilities while preserving this dispute for another day.

Ultimately, RCTC filed a lawsuit against the Gas Company in the Riverside Superior Court, seeking reimbursement of the amounts it had paid to the Gas Company, as well as for trespass related to the Gas Company’s refusal to relocate its facilities and enter into new license agreements related to the facilities it had relocated. After considering cross-motions for summary judgment, the trial court ruled in favor of RCTC on its reimbursement claim but in favor of the Gas Company on its trespass claim. Both RCTC and the Gas Company appealed.

After considering numerous briefs by both parties, the Fourth District Court of Appeal ultimately settled on the following relevant analyses:

• Reimbursement: Where there is an applicable license with language that requires a public utility to relocate its facilities at its own expense, the license controls. Where there is not an applicable license, the common law requires a public utility to relocate its facilities at its own expense where the public agency is acting under the authority granted to it.
• Trespass: The court broke the trespass issue into three general categories. First, if a public utility has franchise rights to locate its facilities in a location, the public utility cannot be held in trespass and it cannot be required to enter into a license. Second, if a public utility has franchise rights to locate its facilities in a location and it chooses to enter into a license, then it waives its franchise rights and may be held in trespass if a public agency terminates the licenses and the utility does not relocate its facilities in a reasonable period of time. Finally, if a public utility has franchise rights to locate its facilities in a location, it chooses to enter into a license, and then the public agency consents to the relocation of the public utility without reserving its right to require the public utility entering into a new license, then the public utility’s rights to locate its facilities in a location reverts back to its franchise rights and it cannot be held in trespass.

Based on these rulings, the appellate court upheld the trial court’s ruling in favor of RCTC on its reimbursement action and reversed the trial court’s ruling in the Gas Company’s favor on the trespass action.

What Does This Mean for Transportation Agencies?
While decades of jurisprudence support the appellate court’s decision, this decision’s thorough review of that jurisprudence and definitive analysis provides transportation agencies with the clearest statements yet that public utilities — and not public agencies — should bear the cost of removing, relocating and/or abandoning facilities that conflict with a public agency’s project, and that public utilities may be held in trespass when they do not relocate their facilities in a reasonable period of time after a public agency terminates its license. As such, and as the Court of Appeal indicates, this decision will hopefully provide some resolution to a dispute that has been occurring for more than 160 years.

Note: Best Best & Krieger LLP represented RCTC in this matter.

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