6. Discussion

6.1 Franchise Rights

The Legislature has authorized cities and counties to enter into franchise agreements with utilities pursuant to the Franchise Act of 1937, codified at Sections 6201 through 6302 of the Public Utilities Code. Relocation of utility facilities is governed by Section 6297, which states:

"The grantee [of a franchise] shall remove or relocate without expense to the municipality any facilities installed, used, and maintained under the franchise if and when made necessary by any lawful change of grade, alignment, or width of any public street, way, alley, or place, including the construction of any subway or viaduct, by the municipality."

By definition, a "municipality" is a city or county. (Pub. Util. Code § 6201.5.) Special districts, like reclamation districts, are not "municipalities," that is, they are not general purpose governments and can only exercise the powers granted by statute.

Based on the requirements of the Public Utilities Code, PG&E has filed tariffs, approved by this Commission, governing the relocation of its facilities upon proper exercise of franchise authority by a city or county. Where no franchise exists, PG&E's Tariff Rule 16G2 governs, providing in pertinent part:

"[W]here relocation of a service, including PG&E owned transformers, is for the convenience of the applicant or the customer, such relocation will be performed by PG&E at the expense of the applicant or the customer."

It is undisputed that the District does not have a franchise agreement with PG&E, nor does it have the authority to require the removal of PG&E facilities through the franchise provisions of state law.

Nevertheless, the District argues that it is a public agency and that its expansion of the levees was a proper exercise of its police power in the public interest. Accordingly, it maintains, PG&E's facilities were subject to an implied obligation of relocation at the utility's expense to make way for expansion of public works. The District relies primarily on the case of City of Livermore v. Pacific Gas and Electric Company (1997) 51 Cal.App. 4^th, in which the Court of Appeal held that a public utility was bound to relocate its facilities when necessary to make way for a proper governmental use.

In, Livermore, the City of Livermore had a franchise agreement with PG&E. The city required developers to widen a street from two to six lanes as part of the developers' plans for a shopping center and a residential subdivision. At the developers' request, the city created an assessment district to fund the street widening project. PG&E refused to pay for the relocation of its facilities, arguing that the assessment district should pay because the developers had created the need for widening the streets. The Court of Appeal disagreed, finding that a city's decision to create an assessment district did not alter a utility's common law and franchise obligation to move its facilities at its own cost to make way for a proper governmental use.

Here, however, PG&E's facilities were not installed under a franchise agreement with a city, as in Livermore. Moreover, neither city nor county franchises agreements with PG&E apply to the installations within Bishop Tract, nor did the District at any time seek to have PG&E facilities relocated pursuant to the franchise authority of the city or county.

PG&E urges that we be guided by the case of PG&E v. Dame Construction Company, Inc. (1987) 191 Cal.App.3d 233. There, the county board of supervisors approved a developer's plan for a subdivision on the condition that the developer widen a portion of the street adjacent to the site, necessitating the relocation of PG&E facilities. PG&E prevailed in its suit to recover the costs of relocation. The Court of Appeal held that where a private party develops a parcel of land and thereby creates a need for public improvement requiring relocation of utility equipment, the private party must bear the relocation costs.

The Dame case, however, centered on the actions of a private developer, rather than a legally constituted government agency like the District. PG&E argues that District Board members who own significant acreage within Bishop Tract are using District authority to accomplish personal gain. We reject that argument. The Water Code contemplates that a reclamation district board will be comprised of landowners (or their legal representatives) within the district. (Water Code § 50700.) The fact that the value of their holdings is increased by a project that restores Bishop Tract to a position outside the 100-year flood plain does not lessen the public interest served by such a project.

It follows that neither Livermore nor Dame is dispositive on the facts of this case.

We do, however, find instructive another line of cases cited by the Court in Dame.² These are the so-called "benefit" cases that deal with the question of which of two public entities should assume responsibility for relocation of utility facilities. These cases are exemplified by County of Contra Costa v. Central Contra Costa Sanitary Dist. (1960) 182 Cal.App.2d 176. There, a sewer owned by a sanitary district was relocated by the county at the flood control district's request. The county, acting on behalf of the flood control district, sued the sanitary district for the cost of moving the sewer line. The appellate court affirmed the trial court's denial of reimbursement, stating "[t]he cost of relocation should not be borne by the taxpayers of the County generally nor by the taxpayers of the Sanitary District, but rather by the people resident within the Flood Control zone benefited by the improvement." (182 Cal.App.2d at 179-180.) In other words, where a franchise is not determinative, a court may look to the primary beneficiary to absorb the costs of a public works improvement.

One commentator has noted that this decision provides "the basis for an equitable solution" to the utility relocation dilemma. (Van Alstyne, Governmental Tort Liability: A Public Policy Prospectus (1963) 10 UCLA L.Rev. 463, 502.) Van Alstyne explains that in the Contra Costa County case, "[n]o relocation expense would have been incurred at all had it not been for the new improvement being constructed by the Flood Control District for the benefit of its residents. The most equitable way to distribute the loss is thus to require the Flood Control District to assume it, thereby passing it on to its taxpayers who are the beneficiaries of the loss-producing activity." (Ibid.)

While the District is the only government entity involved in this case, we do have competing claims as to whether taxpayers within the District or ratepayers of PG&E should bear the cost of relocation of utility facilities.

This Commission has applied the benefit test to a case involving a utility's relocation costs. In Sunrise Oasis Estates v. Southern California Gas Co. (1978) Decision (D.) 88398, 83 CPUC 325,³ a city required a developer, as a condition of approval of his planned subdivision, to pave an adjacent public street. Grading by the developer damaged the utility's underground natural gas line. The utility lowered the gas line to remove the hazard, repaired it, and sought reimbursement for the cost of relocation. The Commission ordered the developer to pay for the relocation because the work was done to enable the developer to meet conditions imposed by the city. The Commission distinguished the case from one in which the city itself, under its franchise agreement, performed the roadwork.

Applying the benefit analysis to the facts of this case, we conclude that the owners of the property within Bishop Tract are the primary beneficiaries of the levee expansion, since the work increases the value of their land and enables them to consider uses other than farming. As Pub. Util. Code § 6297 makes clear, the purpose of requiring utilities to pay costs of relocation under a franchise agreement is to insulate the government and, consequently, taxpayers, from such expenses. Courts have emphasized that this rule cannot easily be avoided by judicial construction because "[i]t is for the Legislature to decide whether [relocation] expenses should be shifted to the taxpayers." (Pacific Tel. & Tel. Co v. Redevelopment Agency of Redlands (1977) 75 Cal.App.3d 957, 968.)

While not dispositive, the benefit line of cases points up the rationale underlying Pub. Util. Code § 6297 and PG&E's tariff rule governing relocation. In the instant case, reasoning analogous to that of Pacific Tel. & Tel. favors imposing relocation costs on District landowners (the primary beneficiaries), rather than imposing those costs on PG&E ratepayers, who are comparable to taxpayers.

6.2 Police Power

The District notes that under Water Code § 50900, "[a] district may do all things necessary or convenient for accomplishing the purposes for which it was formed." It follows, according to the District, that it exercises the police power of the state and its levees are public property. Therefore, PG&E's facilities were subject to an implied obligation of relocation at PG&E expense.

We reject the District's argument. To accept it would mean that a reclamation district through exercise of its police power would have the franchise rights that the Legislature has bestowed only upon cities and counties. Had the Legislature intended to grant such authority to reclamation districts, it would have done so directly, rather than by implication through the provisions of the Water Code.

6.3 Easement Rights

Similarly, we are not persuaded by the District's arguments that its easement rights are superior in time to those of PG&E and that, therefore, as a superior easement holder, it may eject or require relocation of facilities owned by a subsequent holder of an easement at the expense of the subsequent holder.

The more credible evidence at hearing, based on contemporaneous corporate records, shows that PG&E had installed electric lines at Bishop Tract prior to the formation of the District in 1919, and that PG&E obtained valid easements for its later installations. The utility lines at issue have been in place for between 40 and 70 years without objection by the District until the filing of this complaint. The easement granted to the District in 1919 by then then-owner of the Bishop Tract was a non-exclusive one. Absent a showing that subsequent easements to PG&E interfered unreasonably with the District's rights, the subsequent easements for public use purposes are as valid as the first. (Pasadena v. California-Michigan Land & Water Co. (1941) 17 Cal.2d 576.)

Even if the District could establish a superior easement for part of the electric installations, it has lost its right of ejectment with the passage of time. Where an entity with eminent domain authority (like PG&E) enters on the property of another and establishes a public use of its utility line, the property owner is not entitled to ejectment or quiet title or injunctive relief. Rather, the property owner's remedy is limited to damages in the nature of inverse condemnation. (Kachadoorian v. Calwa County Water District (1979) 96 Cal.App.3d 741, 747.) Even that remedy must be brought within three years after constructive notice of the public use installation. (CCP § 338(j).)

While the levees certainly were in place long before electric lines were installed, the evidence shows that the levees were privately owned by California Delta Farms until 1919, and were not dedicated to the public use until at least 1919. Indeed, there is nothing in the record to suggest that the levees were intended to be public facilities for the protection and use of the public. Thus, the District's assertion that construction of the levees created an implied "public use" easement superior to the easements obtained by the utility must fail.

6.4 Conclusion

What we are required to decide in this complaint case, brought pursuant to Pub. Util. Code § 1702, is whether the District has met its burden of proving by a preponderance of the evidence that PG&E has violated "any provision of law or of any order or rule" of the Commission. The District has sought to show such violation through a claim that it is entitled to rights bestowed on California cities and counties by the Franchise Act of 1937. The Legislature has spoken to that question. Only cities and counties may grant public utility franchises in California. (Pub. Util. Code §§ 6202, 6201.5.) Reclamation districts have no such power. Similarly, the District has failed to show that its easement rights somehow create a franchise-like power to require PG&E to relocate its facilities at ratepayer expense rather than at the expense of the District landowners.

The record shows that PG&E properly relocated its facilities pursuant to what was then its Tariff Rule 16G2 at the expense of the District landowners, who were the primary beneficiaries of the project that necessitated the relocation.

Accordingly, we find for PG&E. The District's complaint is denied.