Opinion No. 2017-025

March 24, 2017

Municipalities – Planning Commission – Franchises – Right-of-Way – Elmore County

Absent any contractual franchise arrangement to the contrary, and provided it meets the requirements of section 11-43-62 of the Code of Alabama, a municipality may require a public utility company to relocate its aboveground utility lines and reinstall them in underground conduits or elsewhere.

A public utility that is not regulated by the Alabama Public Service Commission and that provides power, cable, or telephone service must pay to relocate its poles, lines, or systems if the municipality so requires to satisfy a public need. The extent of such payment obligation, if any, by a public utility that is regulated by the Commission is within the exclusive domain of the Commission.

The municipality may reimburse a public utility for the costs of relocating utility lines for the purpose of promoting economic development if the city council complies with the conditions of section 94.01(c) of article IV of the Recompiled Constitution of Alabama.

In the alternative, the municipality may donate funds to a downtown redevelopment authority which may use the funds to reimburse a public utility for the costs of relocating utility lines.


Dear Mayor Willis:

This opinion of the Attorney General is issued in response to your request on behalf of the Wetumpka City Council.

QUESTION 1

Within the public right-of-way, may the city require a public utility company to relocate its aboveground utility lines and reinstall them in underground conduits or elsewhere?

FACTS AND ANALYSIS

Your request states as follows:

The City of Wetumpka is currently in the process of renovating its historic downtown business district in accordance with the “Wetumpka, Alabama Downtown and Riverfront Revitalization Plan” (“Plan”), adopted by the Wetumpka Planning Commission (“Planning Commission”) and City Council in 2014.

The city has already completed an $850,000 infrastructure rehabilitation and has prepared construction documents for a $787,000 streetscape improvement project, financed in part by federal aid transportation funds, which will involve replacing the existing sidewalks in accordance with the Plan. The Plan included a recommendation that the overhead utility facilities located in the streets and sidewalks in the historic district be undergrounded or relocated, as resources became available, to remove barriers to the flow of pedestrian and automobile traffic, and assist in the preservation of the historic character while keeping with the modern requirements for the functioning of the downtown business district.

Section 220 of article XII of the Recompiled Constitution of Alabama provides as follows:

No person, firm, association, or corporation shall be authorized or permitted to use the streets, avenues, alleys, or public places of any city, town, or village for the construction or operation of any public utility or private enterprise, without first obtaining the consent of the proper authorities of such city, town, or village.

Ala. Const. art. XII, § 220. “Under this provision, a city has the right to consent or withhold consent to the operation of a utility within the city, and with authority granted by the Legislature, a city has the additional right to grant a franchise to whomever it desires.” Opinion to Honorable Cheryl Ivey, Town Clerk of Snead, dated March 30, 1990, A.G. No. 90-00199, citing Alabama Power Co. v. Citizens of the State of Ala, 527 So. 2d 678 (1988). “Thus, the consent of the municipality is necessary for a public utility or private enterprise to engage in business in the municipality when the use of public streets or public places is involved.” Id., citing City of Montgomery v. Orpheum Taxi Co., 203 Ala. 103, 82 So. 117 (Ala. 1919).

Section 11-43-62 of the Code of Alabama provides for the municipal authority to regulate franchises as follows:

The council shall regulate the use of the streets for the erection of telegraph, telephone, electric, and all other systems of wires and conduits and may require the same to be placed underground if deemed necessary for the public convenience and safety and generally to control and regulate the use of the streets for any and all purposes.

Ala. Code § 11-43-62 (2008) (emphasis added). This Office has explained that this “section authorizes a municipality to regulate the use of streets and does not specify whether the streets are those only within the corporate limits or whether it includes the streets within the police jurisdiction.” Opinion to Honorable Stephen A. McMillan, Member, House of Representatives, dated October 16, 2000, A.G. No. 2001-012, at 2. Therefore, that opinion concluded that a municipality could require the underground installation of electrical lines within the police jurisdiction. See also, Ivey (municipality could require a cable television company to install its cable underground).

A franchise is “subject to the City’s authority to regulate and control the use of its streets. See Southern Bell Telephone & Telegraph Co. v. City of Mobile, 162 F. 523, 533 (S.D.Ala.1907).” Bellsouth Telecomms., Inc. v. City of Mobile, 11 F. Supp. 2d 1261, 1271 (S.D. Ala. 2001). The Alabama courts have recognized that this authority applies even to the facilities of a public utility that have already been installed. State ex rel. City of Gadsden v. Alabama City, G. & A. Ry. Co., 172 Ala. 125, 55 So. 176 (1911) (municipality could require railroad to remove and replace rails); City Council of Montgomery v. Capital City Water Co., 92 Ala. 361, 9 So. 339 (1891) (municipality could require water company to relocate pipes placed in accordance with city ordinance).

A franchise, however, “is in the nature of a contract.” Opinion to Honorable Will Partin, Attorney, Water Works and Sewer Board of the Town of Clayton, dated October 21, 2015, A.G. No. 2016-003, citing Phenix City v. Alabama Power Co., 239 Ala. 547, 195 So. 894 (1940). Accordingly, absent any contractual arrangement to the contrary, and provided it meets the requirements of section 11-43-62 of the Code of Alabama, a municipality may require a public utility company to relocate its aboveground utility lines and reinstall them with underground conduits or elsewhere.

CONCLUSION

Absent any contractual franchise arrangement to the contrary, and provided it meets the requirements of section 11-43-62 of the Code of Alabama, a municipality may require a public utility company to relocate its aboveground utility lines and reinstall them in underground conduits or elsewhere.

QUESTION 2

If “yes” to Question 1, is it the responsibility of the public utility that provides power, cable, or telephone service to pay for relocation of its poles, lines, and systems located in the city’s right-of-way when the city deems the relocation to be necessary?

FACTS AND ANALYSIS

Again, because a franchise is in the nature of a contract, the terms of the franchise agreement will govern. Thus, whether a public utility must pay to relocate its poles, lines, and systems in the right-of-way depends upon the terms of the franchise agreement between the city and the utility. This Office is not aware of any statutory or constitutional provision that directly answers your question if the agreement does not specify whether the utility must pay to relocate its poles, lines, and systems underground or otherwise in the right-of-way. In the absence of statutory or constitutional direction, common-law rules remain in force. Ala. Code § 1-3-1 (1999).

This Office has stated, regarding highways, that, “[u]nder the principles of common law followed by Alabama and many of our states, . . . the owners or operators of utilities have the legal responsibility for the adjustment or relocation of the facilities of the utilities involved within or from the public right of way of a highway when deemed necessary for highway purposes by the highway authority.” Opinion to Honorable Fred W. Purdy, Mayor, City of Fort Payne, dated December 16, 1982, A.G. No. 83-00112, at 1-2 (emphasis added). This reasoning is consistent with the terms of one treatise, which states that “[t]he fundamental common-law right applicable to franchises in streets is that the utility company must relocate its facilities in public streets when changes are required by public necessity.” 12 Beth A. Buday & Dennis Jensen, The Law of Municipal Corporations 34.74.10, at 224 (3d ed., rev. 1995). It is important to note, however, that in the context of highways, section 23-1-5 of the Code of Alabama has modified the common-law rule and clarified payment obligations. Purdy. This Office understands that the streetscape project here does not involve a highway.

Alabama courts have not discussed whether the common law requires a public utility to relocate its poles, lines, and systems at its own expense under conditions such as those before us. The United States Supreme Court, however, has recognized “the long-established common law principle that a utility forced to relocate from a public right-of-way must do so at its own expense.” Norfolk Redevelopment & Hous. Auth. v. Chesapeake and Potomac Tel. Co. of Virginia, 464 U.S. 30, 34 (1983). Other state courts have reached the same conclusion. City of Albuquerque v. New Mexico Pub. Regulation Comm’n, 79 P. 3d 297 (N.M. 2003); So. Union Gas Co. v. City of Artesia, 472 P. 2d 368 (N.M. 1970); Bristol Tennessee Hous. Auth. v. Bristol Gas Corp., 407 S.W. 2d 681, 682 (Tenn. 1966); City of Baltimore v. Baltimore Gas & Elec. Co., 192 A. 2d 87, 93 (Md. 1963) (“[t]he ordinance under which the streets to be used in the building of the housing project were closed does not direct the City to pay utilities facilities[’] relocation costs, being silent on the subject, so that, as far as that ordinance is concerned, the common law rule, that the utility must pay, is unaffected”); New Rochelle Water Co. v. State, 177 N.E. 2d 771 (N.Y. App. 1961); Binghamton Gas Works v. State, 53 N.Y.S. 2d 545 (N.Y. Ct. of Cl. 1945).

Some courts, however, have recognized a fine distinction between projects for “governmental” and “proprietary” projects. Detroit Edison Co. v. City of Detroit, 527 N.W. 2d 9, 11 (Mich. Ct. App. 1994); City of Baltimore, at 95; In re Gillen Place, Borough of Brooklyn, City of New York, 304 N.Y. 215, 221, 106 N.E. 2d 897, 900 (N.Y. 1952). Nevertheless, most courts reject this distinction and continue to apply the common-law rule. E.g., N. States Power Co. v. Fed. Transit Admin., 358 F. 3d 1050, 1053 (8th Circ. 2004); Whisenhunt v. SW Bell Tel., 573 F. 3d 565, 568 (8th Circ. 2009); U.S. W. Commc’ns, Inc. v. City of Longmont, 948 P. 2d 509, 522-23 (Colo. 1997); City and Cty. of Denver v. Mountain States Tel. and Tel. Co., 754 P. 2d 1172, 1176 (Colo. 1988); NW Nat. Gas Co. v. City of Portland, 300 Or. 291, 301-02, 711 P. 2d 119, 126 (1985); Pac. Tel. & Tel. Co. v. Redevelopment Agency, 75 Cal. App. 3d 957, 968, 142 Cal. Rptr. 584, 591 (1977); New York Tel. Co. v. City of Binghamton, 219 N.E. 2d 184, 186 (N.Y. 1966); Port of New York Auth. v. Hackensack Water Co., 41 N.J. 90, 97-98 (N.J. 1963); State v. Pub. Util. Dist. No. 1 of Clark Cty., 349 P. 2d 426, 429 (Wash. 1960).

Based on these authorities, a utility that provides power, cable, or telephone service must generally pay to relocate underground or otherwise its poles, lines, or systems that are in the right-of-way to meet a public need. Utilities regulated by the Alabama Public Service Commission (“Commission”), however, must be examined more closely. The Commission has exclusive jurisdiction over the “rates and service regulations and equipment” of public utilities. Ala. Code § 37-1-31 (2012). Therefore, the obligation of these utilities to make such a payment, if any, is within the exclusive domain of the Commission.

CONCLUSION

A public utility that is not regulated by the Alabama Public Service Commission and that provides power, cable, or telephone service must pay to relocate its poles, lines, or systems if the municipality so requires to satisfy a public need. The extent of such payment obligation, if any, by a public utility that is regulated by the Commission is within the exclusive domain of the Commission.

QUESTION 3

May the city reimburse a public utility for the costs to relocate utility lines?

FACTS AND ANALYSIS

This Office understands that the utilities here are private entities. Section 94 of article IV of the Recompiled Constitution of Alabama prohibits a municipality or county from granting money or other thing of value in aid of a private individual, corporation, or association. Ala. Const. art IV, § 94 (amends. 112, 558). Section 94.01 of article IV of the Recompiled Constitution of Alabama authorizes a municipality to grant funds to any person or organization for the purpose of promoting economic development in the municipality. Ala. Const. art. IV, § 94.01(a)(3) (amend. 772). Section 94.01 requires two conditions be met prior to the municipality’s being able to grant public funds. Sections 94.01(c)(1) and (2) require that the proposed action serve a valid public purpose and that notice and a meeting be held regarding the proposed action. Ala. Const. art. IV, § 94.01(c) (amend. 772).

This Office has stated that the City of Roanoke could donate funds to the Rotary Club of Roanoke to renovate a theatre as part of the city’s downtown revitalization plan if the city complied with the conditions of section 94.01(c). Opinion to Honorable John A. Tinney, Attorney, City of Roanoke, dated September 9, 2014, A.G. No. 2014-094. Consistent with that opinion, the City of Wetumpka could provide reimbursement to the utilities under section 94.01.

In addition, there is an alternate mechanism for such reimbursement. This Office understands that a downtown redevelopment authority has been created pursuant to sections 11-54A-1, et seq., of the Code of Alabama. Ala. Code §§ 11-54A-1 to 11-54A-25 (2008). “The purpose of a downtown redevelopment authority is to promote the general welfare and public good through revitalization and redevelopment of a business district by financing various projects.” Opinion to Honorable Jimmy Carter, Mayor, Town of Collinsville, dated July 11, 2006, A.G. No. 2006-118, at 2, citing Ala. Code § 11-54A-1 (2008). “[R]edevelopment authorities designate a development area, i.e., ‘any business district of the city which is not more than three miles from the central business district and shall include areas used predominately for business and commercial purposes,’ and devise projects that will be located within the development area.” Id., quoting Ala. Code § 11-54A-2(8) (2008).

“[T]he authority has the ability to, among other things, finance projects, accept gifts, purchase property, receive financial assistance, and contract with the municipal authority.” Carter, citing Ala. Code § 11-54A-9 (2008). The city may lend or donate money to the authority or perform services for the authority. Ala. Code § 11-54A-22 (2008). The city may also “[d]onate, sell, convey, transfer, lease or grant to the authority, without the necessity of authorization at any election of qualified voters, any property of any kind, any interest therein and any franchise.” Id.

Moreover, the authority may “finance (by loan, grant, lease, or otherwise), construct, erect, assemble, purchase, acquire, own, repair, remodel, renovate, rehabilitate, modify, maintain, extend, improve, install, sell, equip, expand, add to, operate, or manage projects,” as well as “pay the cost of any project from the proceeds of bonds, or any other funds of the authority, or from any contributions or loans by persons, corporations, partnerships (limited or general), or other entities.” Ala. Code § 11-54A-9(11) (2008). The authority may also “make, enter into, and execute such contracts, agreements, leases, and other instruments” and “take such other actions as may be necessary or convenient to accomplish any purpose for which the authority was organized or to exercise any power expressly granted” in section 11-54A-9. Ala. Code § 11-54A-9(20) (2008). Furthermore, the authority may “do all things necessary or convenient to carry out the powers conferred” by chapter 54A of title 11 of the Code of Alabama. Ala. Code § 11-54A-9(25) (2008).

“These provisions of the Code provide a redevelopment authority with broad powers to create development areas and develop projects within the areas for the purpose of promoting trade, commerce, industry, and employment opportunities.” Carter, at 3-4. Accordingly, the city may reimburse the utilities here for all or part of the costs of relocating utility lines underground or elsewhere, either directly under section 94.01, or by donating money to an authority, which enjoys broad spending powers.

CONCLUSION

The municipality may reimburse a public utility for the costs of relocating utility lines for the purpose of promoting economic development if the city council complies with the conditions of section 94.01(c) of article IV of the Recompiled Constitution of Alabama.

In the alternative, the municipality may donate funds to a downtown redevelopment authority which may use the funds to reimburse a public utility for the costs of relocating utility lines.

I hope this opinion answers your questions. If this Office can be of further assistance, please contact me.

Sincerely,

 

STEVEN T. MARSHALL

Attorney General

By:

WARD BEESON, III

Chief, Opinions Section

 

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