No Takings Claim for Utilities Displaced by Government Streetcar Project

The Ninth Circuit ruled that two investor-owned utilities had no takings claim when a local transit authority asked them to move their equipment to make way for a streetcar line. The ruling means that the utilities will have to pay the costs of the relocations, unless the government (in its graces) voluntarily pays.

The case, Southern California Edison v. Orange County Transportation Authority, arose when OCTA asked Southern California Edison and Southern California Gas Company, two investor-owned utilities, to move pipes, transmission lines, and other equipment so that OCTA could construct a streetcar line. The utilities estimated that the relocations would cost about $15 million (total, for both utilities together). They sued, arguing that OCTA's ask constituted a taking of private property requiring just compensation.

The Ninth Circuit rejected the claim. The court said that under California law the utilities had no property interest. That's because under California Supreme Court precedent, "it has generally been held that a public utility accepts franchise rights in public streets subject to an implied obligation to relocate its facilities therein at its own expense when necessary to make way for a proper governmental use of the street." The court rejected the utilities' claim that the streetcar project was proprietary, not "governmental":

OCTA easily satisfies [the governmental-project] standard. In building the streetcar line--that is, in making use of the public streets of Orange County, OCTA exercised its state-delegated authority to meet the "demand for an efficient public transportation system in the southern California region," "reduce the levels of automobile-related air pollution," and "offer adequate public transportation to all citizens, including those immobilized by poverty, age, physical handicaps, or other reasons." In other words, OCTA invoked the public right to use the streets for public benefit.

The court also rejected the utilities' claim that rail lines are per se proprietary activities, holding that case law didn't support that conclusion.