Opinion ID: 2520953
Heading Depth: 2
Heading Rank: 1

Heading: Local Police Power and the Common Law of Relocation

Text: {2} The burden shall be on the party appealing to show that the [PRC] order appealed from is unreasonable, or unlawful. NMSA 1978, § 62-11-4 (1965). The Local Governments contend that the tariff in this case is unlawful because it interferes with their police powers. Before analyzing the tariff, we first discuss the extent of those powers. As we explain in more detail below, while municipalities have the authority to improve or relocate their public ways and the common law recognizes as an aspect of this authority the power to require utilities to bear their costs associated with a street improvement or relocation, the common law rule applies only if the municipal project is required in the interest of public health and safety. {3} A municipality is an auxiliary of the state government. Morningstar Water Users Ass'n v. Farmington Mun. Sch. Dist. No. 5, 120 N.M. 307, 316, 901 P.2d 725, 734 (1995). Depending on whether they have adopted a charter, municipalities have two potential sources of authority: home rule power and police power. For home rule power, the New Mexico Constitution provides that [a] municipality which adopts a charter may exercise all legislative powers and perform all functions not expressly denied by general law or charter. N.M. Const. art. X, § 6(D). The purpose of this section is to provide for maximum local self-government. N.M. Const. art. X, § 6(E); see Apodaca v. Wilson, 86 N.M. 516, 521, 525 P.2d 876, 881 (1974) ([A] home rule municipality no longer has to look to the [L]egislature for a grant of power to act, but only looks to legislative enactments to see if any express limitations have been placed on their power to act.). By contrast, [i]t is well settled that municipalities have no inherent right to exercise police power; their right must derive from authority granted by the State. Temple Baptist Church, Inc. v. City of Albuquerque, 98 N.M. 138, 142, 646 P.2d 565, 569 (1982). Similarly, [a] county is but a political subdivision of the State, and it possesses only such powers as are expressly granted to it by the Legislature, together with those necessarily implied to implement those express powers. El Dorado at Santa Fe, Inc. v. Bd. of County Comm'rs, 89 N.M. 313, 317, 551 P.2d 1360, 1364 (1976); see NMSA 1978, § 4-37-1 (1975) (All counties are granted the same powers that are granted municipalities except for those powers that are inconsistent with statutory or constitutional limitations placed on counties.). {4} With respect to the particular factual context of this case, utilities are authorized to place their pipes, poles, wires, cables, conduits, towers, piers, abutments, stations and other necessary fixtures, appliances and structures, upon or across any of the public roads, streets, alleys, highways and waters in this state subject to the regulation of the county commissioners and local municipal authorities.  NMSA 1978, § 62-1-2 (1909) (emphasis added). Counties and home rule municipalities are authorized to grant franchises to utilities to use public ways within cities and towns for their facilities provided that such use shall not unnecessarily obstruct public travel. NMSA 1978, § 62-1-3 (1987). Municipalities are further empowered to lay out, establish, open, vacate, alter, repair, widen, extend, grade, pave or otherwise improve streets and regulate their use. NMSA 1978, § 3-49-1 (1967). The matters relating to the design and location of municipal road projects, if carried out in conformity with applicable law, generally involve policy questions entrusted to the discretion of municipal or public authorities. City of Albuquerque v. State ex rel. Vill. of Los Ranchos de Albuquerque, 111 N.M. 608, 614, 808 P.2d 58, 64 (Ct.App.1991). {5} Generally, as an incident of a utility's use of municipal streets for its facilities, the utility must defer to the municipality's discretion to alter, improve, or relocate its streets. At common law, the right of a utility to use the streets is subject to the right of the municipality to require the utility to relocate its lines and facilities when necessary, because of changes in street locations or improvements, or as otherwise required in the interest of the public health and welfare. In the absence of a valid ordinance or statute to the contrary, such removal of facilities must be accomplished at the expense of the utility. S. Union Gas Co. v. City of Artesia, 81 N.M. 654, 655, 472 P.2d 368, 369 (1970). We reject the PRC's argument that this common law rule does not apply to undergrounding. A utility locates its facilities above, on, or under a public way at the risk that they might be, at some future time, disturbed, when the [governmental authority] might require for a necessary public use that changes in location be made, and a municipality's police power in this regard extends to the subsurface of the streets, which, no less than the surface, is primarily under public control. New Orleans Gaslight Co. v. Drainage Comm'n, 197 U.S. 453, 461, 25 S.Ct. 471, 49 L.Ed. 831 (1905). {6} Nonetheless, as the City of Albuquerque recognized in its arguments to the hearing examiner below, this common law rule of requiring utilities to relocate at their own expense extends only to improvements or municipal projects undertaken out of public necessity. See 12 Beth A. Buday & Dennis Jensen, The Law of Municipal Corporations 34.74.10, at 224 (3d ed., rev.1995) (The 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.) [hereinafter The Law of Municipal Corporations ]. [I]f the relocation is not necessary to maintain or improve street conditions, the municipality must pay the costs. Id. at 225. Although aesthetic considerations alone do justify the exercise of police power, Temple Baptist Church, 98 N.M. at 144, 646 P.2d at 571; see 3-49-1(C) (authorizing municipalities to provide for beautification of streets), a municipal improvement project that is based on aesthetics rather than public health and safety will not trigger the common law rule of requiring utilities to bear the expense of relocation. N. States Power Co. v. City of Oakdale, 588 N.W.2d 534, 542 (Minn.Ct.App.1999) (We decline the invitation to extend the law with respect to municipal regulation of public utilities [for aesthetic or convenience considerations only], and instead apply the more traditional public interest tests of public health, safety, and general welfare.); accord Rochester Tel. Corp. v. Vill. of Fairport, 84 A.D.2d 455, 446 N.Y.S.2d 823, 826 (1982). See generally State ex rel. City of Albuquerque v. Lavender, 69 N.M. 220, 227, 365 P.2d 652, 657 (1961) (noting the relevance of takings considerations in the context of relocation); Redev. Auth. v. Woodring, 498 Pa. 180, 445 A.2d 724, 727-28 (1982) (affirming a finding of a de facto taking for an undergrounding ordinance motivated by aesthetics). {7} Moreover, a home rule municipality's power to legislate is subject to limitation by the Legislature. N.M. Const. art. X, § 6(D); see Casuse v. City of Gallup, 106 N.M. 571, 573, 746 P.2d 1103, 1105 (1987) ([A]ny New Mexico law that clearly intends to preempt a governmental area should be sufficient without necessarily stating that affected municipalities must comply and cannot operate to the contrary.). Local governments also cannot use their police power over street improvements or their home rule power to frustrate or violate established public policy. Cf. ACLU v. City of Albuquerque, 1999-NMSC-044, ¶ 13, 128 N.M. 315, 992 P.2d 866 (To allow municipalities to criminalize the otherwise lawful behavior of children remaining on public streets during curfew hours, or to characterize any act of a child as criminal, as opposed to delinquent, would circumvent and thereby frustrate the Legislature's intent to protect children and uniformly enforce laws of a penal nature against them.). {8} These principles are relevant in the present case because ratemaking is a matter of statewide rather than local concern and the PRC retains plenary authority over ratemaking, City of Albuquerque v. N.M. Pub. Serv. Comm'n, 115 N.M. 521, 530, 854 P.2d 348, 357 (1993). Enacted in 1941, the [New Mexico Public Utility Act] significantly changed the method of public utility regulation in New Mexico. Prior to that year, New Mexico had followed a localized scheme of regulation, with individual municipalities possessing the authority to regulate public utilities.... The PUA abolished this localized regulatory scheme and established a statewide, centralized regulatory system. Id. at 527, 854 P.2d at 354 (footnote omitted). [B]ecause ratemaking inevitably affects the financial health of a public utility, the utility's rates are always a matter of statewide concern, at least when a utility serves more than one municipality in the state. Id. at 530, 854 P.2d at 357. As a result, local governments cannot create the equivalent of a statewide policy governing utilities or use their police power in a manner that will detrimentally affect utility rates for the State as a whole. See Duquesne Light Co. v. Borough of Monroeville, 449 Pa. 573, 298 A.2d 252, 256 (1972) (concluding that the public utility commission has approval power over local undergrounding ordinances and ultimate authority to determine the particulars of implementation, including timing, feasibility and cost of the project); Gen. Tel. Co. of Nw v. City of Bothell, 105 Wash.2d 579, 716 P.2d 879, 884 (1986) (en banc) ([A] municipality cannot, under the guise of police regulations, usurp the functions of a state public service commission.); see also City of Albuquerque, 115 N.M. at 530, 854 P.2d at 357 ([A] proposed service rate for one municipality can affect rates to other municipalities in the state.). A home rule municipality may not usurp the Commission's authority to regulate pursuant to Article XI.... Las Cruces TV Cable v. N.M. State Corp. Comm'n (In re Generic Investigation into Cable Television Servs.), 103 N.M. 345, 351, 707 P.2d 1155, 1161 (1985). Thus, any undergrounding requirement by local governments cannot unduly interfere with the Legislature's declared public policy of ensuring that reasonable and proper [utility] services ... be available at fair, just and reasonable rates, NMSA 1978, § 62-3-1(B) (1967). Cf. Las Cruces TV Cable, 103 N.M. at 351, 707 P.2d at 1161 (Although the regulatory authority at issue is not specifically denied to home rule municipalities by Article XI, the grant of the authority to the Commission makes its exercise by any other governmental body so inconsistent with the Constitution that it is equivalent to an express denial.). See generally State ex rel. Haynes v. Bonem, 114 N.M. 627, 632, 845 P.2d 150, 155 (1992) ([I]n order for a statute to override an enactment of a home rule municipality, the statute must relate to a matter of statewide concern.); 12 The Law of Municipal Corporations, supra, 34.72, at 215 ([T]he public improvement must not unnecessarily interfere with the rights of the grantee of the franchise.). {9} Additionally, local governmental authority is more specifically limited with respect to public highways. In this context, the Legislature has determined that it is in the public interest to provide for the orderly and economical relocation of utilities when made necessary by ... highway improvements, including extensions thereof within urban areas. NMSA 1978, § 67-8-15(A) (1959). The Legislature recognized that [u]tilities have been authorized by statute for many years to locate their facilities within the boundaries of public roads and streets in this state; ... utilities are subject to extensive regulation by state agencies[,] and they are affected with the public interest.... Section 67-8-15(B). The Legislature also noted that all persons in this state are actual or potential consumers of one or more utility services, and all consumers will be affected by the cost of relocation of their utilities as necessary to accommodate highway improvements. Section 67-8-15(B)(4). As a result, the Legislature has declared as the public policy of this State, Public highways are intended principally for public travel and transportation; but they are also intended for proper utility uses in serving the public, as authorized pursuant to the laws of this state, and such utility uses are for the benefit of the public served. Without making use of public ways utility lines could not reach or economically service the adjacent public, particularly in urban areas. Section 67-8-15(B). Utility relocations necessitated by construction of public highways or improvements thereto are a public governmental function, properly a part of such construction and to the extent in this act provided such relocations shall be made at state expense.... Section 67-8-15(E). This public policy applies to `public highways,' which are defined in part as state highway[s] or other public way[s] in this state, including extensions thereof within urban areas, constructed in whole or in part with state aid. NMSA 1978, § 67-8-16(D) (1959). {10} The Legislature delegated the power to provide for the relocation of utility facilities within a public highway to the State Highway and Transportation Department. NMSA 1978, § 67-8-17(A) (1959). [1] The Department may provide for relocation upon a finding that the action provided for is necessitated by highway improvement. Section 67-8-17(A). The Legislature directed the Department to promote the public interest in the highway improvement without undue cost or risk and without impairment of utility service. Id. With respect to these statutes, we have previously noted that a proper balancing of the benefits to be obtained by the exercise of the state's police power in requiring the relocations of utilities at the sole expense of the owners thereof, as opposed to the burdens, fully justifies the expenditure of public monies for the purpose of doing equity. Lavender, 69 N.M. at 234, 365 P.2d at 662. It is clear that the Legislature intended these statutes to be preemptive on the subject of relocation costs. Therefore, local governments are precluded from altering this legislative scheme by requiring undergrounding at the utility's expense on any roads falling within the definition of public highway in Section 67-8-16(D). {11} As these principles demonstrate, local governments possess the authority to require a utility to relocate its facilities at the utility's expense as a result of street improvement or urban renewal projects, S. Union Gas Co., 81 N.M. at 655-56, 472 P.2d at 369-70, but the common law rule of imposing the expenses of relocation on the utility applies only if the improvement project is necessitated by public health and safety. In addition, neither the improvement project nor the imposition of relocation expenses on the utility may interfere with established public policy on matters of statewide concern. Against this background, we now address the Local Governments' contention that the tariff is inconsistent with local police powers and the common law rule of relocation.