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City of Chandler v. Arizona Department of Transportation - 5/20/2010

Arizona Court of Appeals Division One Holds That A City Is Responsible for Paying the Expenses to Relocate Its Utility Lines When Necessitated by Road Improvements, Unless the Utility Lines Were in Place Before the Public Acquisition of the Roadway.


In the early twentieth century, six properties near what is now the intersection of McQueen and Willis Roads were deeded from one private party to other private parties.  The deeds for these properties dedicated easements for roads, and Maricopa County (on behalf of the State) accepted the dedications by recording plats for McQueen and Willis Roads and declaring them public rights of way.

In the late twentieth century, the City of Chandler placed utility lines under the roadway easements, although the McQueen and Willis intersection was outside the City’s southern boundary.  There was no permit or contract authorizing this construction, but the County apparently never objected to the City’s placing or using the utility lines.

In 2001, Arizona Department of Transportation established the Loop 202 as a state highway and later took control of the public property rights in the McQueen and Willis intersection previously managed by the County.  ADOT notified Chandler that it would have to relocate its utility lines.  This lawsuit resolved the dispute between ADOT and Chandler over whose responsibility it was to pay for the relocation.  On cross-motions for summary judgment, the trial court concluded that it was Chandler’s responsibility.  The Court of Appeals affirmed.

Chandler and ADOT agreed that the conveyances in the early twentieth century resulted in valid common law dedications, which the County properly accepted, thus creating roadway easements.  The parties also agreed that the State, through ADOT, had the right to manage and control whatever property rights attached to the easements.  The parties disputed, however, the scope of those rights.  Chandler argued that the State held only a “surface easement,” but the Court of Appeals rejected this contention, citing case law from Arizona and other states holding that a roadway easement includes substantial subsurface rights, including rights for utility lines.

Nevertheless, the City argued that the State had to pay for relocation of the utility lines because (1) the lines were present before the Loop 202 came into existence, (2) no permit or contract limited the City’s rights to the utility lines, and (3) the City did not place the utility lines based on a “franchise right.”  The Court also rejected each of these arguments, resting its reasoning largely on its opinion in Sanitary District No. 1 v. State, 1 Ariz. App. 45, 399 P.2d 179 (1965).

First, the Court noted the Arizona common law rule that a public utility has the duty to relocate its lines when street improvements make relocation necessary.   And, in Sanitary District No. 1, the Court had stated that with respect to the duty to relocate utility lines, “a municipality is in no better position than a privately owned public utility.”  The single exception to this rule is when the utility lines are in place before the dedication of the street, which indisputably did not apply to this case.  It did not matter that the Loop 202 was a new right-of-way with a different alignment because ADOT’s plan for the roadway construction was a reasonable and proper exercise of state police power.  Further, the Court found the City’s second and third arguments illogical because they would allow the City to claim greater rights than a properly permitted or franchised utility simply by avoiding seeking the full approval of the requisite governmental entity.

Finally, the Court rejected Chandler’s claim that the State owed it just compensation for taking its property rights.  A utility is not entitled to compensation for its relocation expenses if the State’s action is reasonable, which it was in this case.

Judge Portley authored the opinion; Judges Winthrop and Downie concurred 

Posted On: 6/3/2010