In Pasadena Metro Blue Line Construction Authority v. Pacific Bell Telephone Company (— Cal.Rptr.3d —, Cal.App. 2 Dist., June 15, 2006), a California Court of Appeal considered whether a California law that requires a metropolitan transportation authority to reimburse utility companies for the relocation of their utility lines during construction of its transit system applies to a construction authority created by the legislature to complete a light rail public transit project after the transportation authority suspended the project. The Court of Appeal held that the construction authority must bear the cost of relocating the utility lines.
Facts
The Los Angeles County Metropolitan Transportation Authority (“MTA”) was to build an extension of one of its light rail public transit system lines from Los Angeles Union Station to Pasadena. After MTA suspended the project, the Legislature created a new entity, the Pasadena Metro Blue Line Construction Authority (“Authority”) to complete the project. The Legislature gave the Authority a broad grant of powers including the power to accept grants, fees, and distributions from government agencies and private entities, and the power to relocate utility lines to complete the project. The Legislature provided that the Authority shall dissolve upon completion of the project and MTA shall assume responsibility for operating the light rail line. As required by law, MTA and the Authority entered into an agreement and placed all the assets accumulated by MTA for the project into a trust held by the Authority. The Authority agreed that it would comply with all laws applicable to the project.
When MTA constructed its previous rail lines, it entered into agreements with various utility companies to pay the costs of utility relocation. Although the Authority’s budget included money to pay for the costs of utility relocation, it asserted that it had no obligation to do so. The Authority paid Pacific Bell Telephone Co., Southern California Gas Co., and Southern California Edison Co., for the costs of relocation, but it later filed a lawsuit against the utility companies for reimbursement of the previously paid expenses. The trial court granted judgment in favor of the utility companies based upon its conclusion that a law which requires MTA to reimburse utility companies for relocation expenses applies to the Authority because it was acting on MTA’s behalf.
Decision
The general rule regarding the relocation of utility lines provides “that when a public utility accepts franchise rights in public streets, it assumes an implied obligation to pay for the relocation of its facilities when necessary to make way for a proper governmental use.” (Public Utilities Code § 6297.) The Legislature, however, may specifically grant a utility company the right to compensation for relocating its utility lines. In enacting Public Utilities Code section 30631 subdivision (b), the Legislature specifically granted utility companies such a right for projects involving the MTA. The Court summarized section 30631 as follows: “In short, if utilities must be moved or relocated in order to construct or operate an MTA transit system, a new and additional burden on such facilities is created and MTA must pay the relocation costs.”
The Authority argued that the general rule, and not section 30631, applies because section 30631 does not mention any other entity besides MTA, the Authority is a separate entity from MTA, and the Legislature specifically granted the Authority the power to relocate utilities. The Court rejected the Authority’s argument and found that section 30631 does apply to the Authority.
The Court noted that, although the transit project may not have been completed by MTA, it was completed for it. The Legislature required MTA to turn over its assets to the Authority. The Authority used MTA’s funds to complete the project. MTA would have been required to use some of those funds to pay for utility relocation. The Court stated that it is “absurd to conclude that the Legislature’s grant of power to relocate utility lines, along with a transfer of MTA funds designed to pay for the relocation costs, was somehow intended to allow the Authority to complete the project for the MTA without paying those costs.” “The Court upheld the judgment in favor of the utility companies finding that “the utility companies should not have to bear the cost of relocating their facilities.”
Legal Alert Email Disclaimer
Legal Alerts are published by Kronick Moskovitz Tiedemann & Girard as a timely reporting service to alert clients and other friends of recent changes in case law, opinions or codes. This alert does not represent the legal opinion of the firm or any member of the firm on the issues described, and the information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the attorney with whom you normally consult.