Court Opinion

ID: 9950255
Source: CourtListenerOpinion
Date Created: 2024-03-13 17:00:56.196469+00
Date Added: 2024-06-11T14:36:17.774727
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

SOUTHERN CALIFORNIA EDISON                No. 22-55498
COMPANY, a California public utility
corporation; SOUTHERN                       D.C. Nos.
CALIFORNIA GAS COMPANY, a                8:20-cv-02186-
California public utility corporation,     DOC-KES
                                         8:20-cv-02187-
       Plaintiffs-counter-                 DOC-KES
       defendants-Appellants,

 v.                                         OPINION

ORANGE COUNTY
TRANSPORTATION AUTHORITY,
a public corporation,

       Defendant-counter-claimant-
       Appellee.

       Appeal from the United States District Court
          for the Central District of California
        David O. Carter, District Judge, Presiding

          Argued and Submitted April 13, 2023
                 Pasadena, California

                  Filed March 13, 2024
2        S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

    Before: Eric D. Miller and Salvador Mendoza, Jr., Circuit
       Judges, and Barry Ted Moskowitz, * District Judge.

                    Opinion by Judge Miller

                          SUMMARY **

                      Civil Rights/Takings

    The panel affirmed the district court’s summary
judgment for the Orange County Transportation Authority
(OTCA) in a 42 U.S.C. § 1983 action brought by two
investor-owned utilities, Southern California Edison
Company and Southern California Gas Company
(collectively, the Utilities), alleging that they are entitled to
compensation either under the Takings Clause or under state
law for having to relocate their equipment from public
streets to allow for the construction of a streetcar line.
    The panel held that the Utilities were not entitled to
compensation under the Takings Clause because they did not
have a property interest under California law in maintaining
their facilities at their specific locations in the face of
OCTA’s efforts to construct a streetcar line. The California
Supreme Court recognized in Southern California Gas Co.
v. City of Los Angeles, 329 P.2d 289 (Cal. 1958), that a
public utility accepts franchise rights in public streets subject

*
 The Honorable Barry Ted Moskowitz, United States District Judge for
the Southern District of California, sitting by designation.
**
  This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.         3

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 streets.
    The panel rejected the Utilities’ argument that
constructing rail lines is per se a proprietary activity, not a
governmental one. California common law has traditionally
required utilities to bear relocation costs when governments
construct subways, and there is no reason why above-ground
rail lines should be treated differently. California law is
consistent with traditional principles of property law,
historical practice, and Supreme Court precedent.
    The panel rejected the Utilities’ supplemental state-law
claim that California Public Utilities Code section 40162
places the costs of relocation on OCTA. That provision says
nothing about imposing the costs of relocation on
OCTA. Thus, section 40162 does not apply to OCTA’s
project.

                          COUNSEL

Julian W. Poon (argued), David A. Battaglia, James L.
Zelenay, Jr., Patrick J. Fuster, and Adrienne M. Liu, Gibson
Dunn & Crutcher LLP, Los Angeles, California, for
Plaintiffs-counter-defendants-Appellants.
David A. DeBerry (argued) and M. Lois Bobak, Woodruff
Spradlin & Smart APC, Costa Mesa, California, for
Defendant-counter-claimant-Appellee.
4     S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

                         OPINION

MILLER, Circuit Judge:

    When a government grants a utility permission to place
pipes, transmission lines, or other equipment in a public
right-of-way, it sometimes becomes necessary to move that
equipment to allow the construction of roads, sewer systems,
or other infrastructure. As the Supreme Court has explained,
“the traditional common law rule” is that utilities are
“required to bear the entire cost of relocating from a public
right-of-way whenever requested to do so by state or local
authorities.” Norfolk Redevelopment & Hous. Auth. v.
Chesapeake & Potomac Tel. Co., 464 U.S. 30, 35 (1983).
    In this case, the Orange County Transportation Authority
(OCTA) asked two investor-owned utilities, Southern
California Edison Company and Southern California Gas
Company (collectively, the Utilities), to move their
equipment from public streets to allow the construction of a
streetcar line. The Utilities argue that the common-law rule
applies only when the relocation is carried out for
“governmental” purposes and that a streetcar line is a
“proprietary” function for which compensation is required.
We disagree, and we conclude that the Utilities are not
entitled to compensation either under the Takings Clause or
under state law. We affirm the judgment of the district court.
                              I
    OCTA is a public agency established by the California
Legislature to address “[p]ublic demand for an efficient
public transportation system in the southern California
region.” Cal. Pub. Util. Code § 130001(a); see 1991 Cal.
Stat. 3356–57. In 2016, OCTA began construction of a 4.15-
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.      5

mile streetcar line connecting downtown Santa Ana with the
Santa Ana Regional Transportation Center and another
transportation hub in the nearby city of Garden Grove.
    The project required the Utilities to relocate pipes,
transmission lines, and other equipment from the streetcar’s
route. The Utilities have maintained that equipment in the
streets of Santa Ana since 1937 and 1938, when they signed
franchise agreements with the city permitting them to lay
“poles, wires, conduits and appurtenances . . . in the public
streets,” and, in exchange, promised to pay the city 2 percent
of their annual receipts “arising from the . . . franchise.”
    Southern California Edison forecast that complying with
OCTA’s relocation requests would cost about $8.8 million;
Southern California Gas projected costs of $6.35 million.
OCTA agreed to advance the Utilities their relocation costs
while reserving the right to demand that the costs should
ultimately fall on the Utilities.
    The Utilities then brought suit under 42 U.S.C. § 1983,
alleging that the relocation constituted a taking of private
property requiring just compensation under the Fifth and
Fourteenth      Amendments.      Separately     from      their
constitutional argument, the Utilities argued that California
Public Utilities Code section 40162 places the costs of
relocation on OCTA. OCTA counterclaimed for the funds it
had advanced the Utilities, plus interest. The parties filed a
joint stipulation of undisputed facts and cross-moved for
summary judgment.
    The district court granted summary judgment for OCTA,
ordering the Utilities to repay all costs that OCTA had
advanced and determining that OCTA has no further
liabilities. The district court did not award interest.
6     S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

    The district court began its analysis of the Utilities’
takings claim by explaining that even a physical invasion of
property by the government will not constitute a taking if it
is “consistent with longstanding background restrictions on
property rights.” Cedar Point Nursery v. Hassid, 594 U.S.
139, 160 (2021). The district court observed that “[u]nder the
traditional common law rule, utilities have been required to
bear the entire cost of relocating from a public right-of-way
whenever requested to do so by state or local authorities.”
Norfolk Redevelopment & Hous. Auth., 464 U.S. at 35. But
that common-law rule does not apply, the district court
explained, when the government demands relocation “not in
its governmental capacity—an exertion of the police
power—but in its ‘proprietary or quasi private capacity.’”
City of Los Angeles v. Los Angeles Gas & Elec. Corp., 251
U.S. 32, 38–39 (1919).
    The district court noted that “the caselaw is not
particularly clear on where to draw the line between
‘proprietary’ and ‘governmental’ purposes,” and it applied
three tests for distinguishing governmental and proprietary
functions. It concluded that under each test, OCTA’s
streetcar project was governmental. First, a project might be
governmental if it is “required in the interest of the public
health and welfare.” New Orleans Gaslight Co. v. Drainage
Comm’n of New Orleans, 197 U.S. 453, 474 (1905). And
“the California legislature has made numerous findings that
construction of mass transit systems is necessary to address”
environmental harms and mobility needs.
    Second, governmental projects might be those that are
“(1) essential or necessary for the government to perform, or
(2) traditional for the government to perform.” Riverside
Cnty. Transp. Comm’n v. Southern Cal. Gas Co., 268 Cal.
Rptr. 3d 196, 230 (Ct. App. 2020). The district court agreed
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.      7

with OCTA that “mass transit projects are exclusively a
government function, and operate at a loss using heavy
government subsidies.”
    Third, the district court considered “whether there is
statutory authority for the government entity to use the
streets in the contested manner.” The district court noted that
the California Legislature has granted OCTA the authority
to administer light rail systems. See Cal. Pub. Util. Code
§ 130001.
    After concluding that the Takings Clause did not require
OCTA to pay the Utilities’ relocation costs, the district court
determined that California Public Utilities Code section
40162 did not shift the costs to OCTA. Section 40162,
enacted as part of the Orange County Transit District Act of
1965, provides that the Orange County Transit District “may
exercise the right of eminent domain” and that “[t]he district
in exercising such power shall . . . pay the cost of removal,
reconstruction or relocation of any structure,” including
“pipes, conduits, cables, or poles.” 1965 Cal. Stat. 4384.
    The district court concluded that section 40162
circumscribed only the Orange County Transit District’s
powers and not those of OCTA. California Public Utilities
Code section 130241 states that “[a]ll the provisions of the
Orange County Transit District Act of 1965 . . . shall be
equally applicable to the Orange County Transportation
Authority.” But the same section later provides that “[t]he
authority shall determine which provisions are applicable to
the authority.” For that reason, the district court determined
that “the provisions of the Orange County Transit District
Act apply to OCTA only when OCTA determines that they
apply,” and here, it concluded, “OCTA has made no such
determination.”
8     S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

                              II
    The Takings Clause of the Fifth Amendment, made
applicable to the States by the Fourteenth Amendment,
provides that “private property [shall not] be taken for public
use, without just compensation.” U.S. Const. amend V; see
Chicago, B. & Q.R. Co. v. City of Chicago, 166 U.S. 226,
247 (1897). Ordinarily, government action that “physically
appropriates” property is treated as “a per se taking”
requiring just compensation. Cedar Point Nursery, 594 U.S.
at 149.
    But before deciding whether the government has taken a
property interest, we first must determine whether any
property interest exists. See Wells Fargo Bank, N.A. v.
Mahogany Meadows Ave. Tr., 979 F.3d 1209, 1214 (9th Cir.
2020) (“The State cannot take what the owner never had.”);
see also Vandevere v. Lloyd, 644 F.3d 957, 963–64 (9th Cir.
2011). “Because the Constitution protects rather than creates
property interests, the existence of a property interest is
determined by reference to ‘existing rules or understandings
that stem from an independent source such as state law.’”
Phillips v. Washington Legal Found., 524 U.S. 156, 164
(1998) (quoting Board of Regents of State Colls. v. Roth, 408
U.S. 564, 577 (1972)); accord Stop the Beach
Renourishment, Inc. v. Florida Dep’t of Env’t Prot., 560
U.S. 702, 707 (2010) (“Generally speaking, state law defines
property interests.”). Our inquiry is not limited to state law,
however, or else “a State could ‘sidestep the Takings Clause
by disavowing traditional property interests’ in assets it
wishes to appropriate.” Tyler v. Hennepin County, 598 U.S.
631, 638 (2023) (quoting Phillips, 524 U.S. at 167). So, we
must look as well to “‘traditional property law principles,’
plus historical practice and [the Supreme] Court’s
precedents.” Id. (quoting Phillips, 524 U.S. at 167).
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.     9

    With that understanding in mind, we consider whether
the Utilities have a property interest in maintaining their
facilities at their specific locations in the face of OCTA’s
efforts to construct a streetcar line. We first examine that
question under California property law and then consider
traditional property-law principles, historical practice, and
precedent.
                              A
    California law does not give the Utilities the property
interest that they assert. More than fifty years ago, the
California Supreme Court recognized in Southern California
Gas Co. v. City of Los Angeles that “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 streets.” 329 P.2d
289, 290 (Cal. 1958). The Utilities acknowledge that rule but
insist that OCTA’s streetcar line is not a “governmental”
project. As Southern California Gas demonstrates, however,
that proposition is not consistent with California law.
    In Southern California Gas, the California Supreme
Court considered whether Los Angeles owed Southern
California Gas Company compensation for the costs of
relocating to make way for a city sewage project. 329 P.2d
at 290. The court held that no reimbursement was owed. In
reaching that conclusion, the court did not expressly define
the term “governmental.” But it explained that the power to
make utilities bear the costs of relocation for governmental
projects originates in the “paramount right of the people as a
whole to use the public streets wherever located.” Id. at 291.
The court also relied on the State’s general police power, id.
at 291–92, which authorizes the State to pursue “the
10    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

preservation of the public peace, safety, morals, and health”
and, more generally, “the promotion of the public welfare,”
Miller v. Board of Pub. Works of City of L.A., 234 P. 381,
383 (Cal. 1925). Based on those principles, the court deemed
it sufficient that the project “invoke[d] the public right for
the public benefit.” Southern Cal. Gas, 329 P.2d at 291.
    OCTA’s streetcar line easily satisfies that 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.” Cal. Pub. Util. Code
§ 130001(a), (b), (e). In other words, OCTA invoked the
public right to use the streets for the public benefit.
    The Utilities do not meaningfully argue that OCTA’s
streetcar line fails to serve a public interest. Instead, they
maintain that it is “settled” that constructing rail lines is per
se a proprietary activity, not a governmental one. That is
incorrect. When the court in Southern California Gas
described “the established rule that a utility’s rights in the
public streets are taken subject to the paramount right of
public travel,” it said nothing to suggest that such travel must
be by car rather than by rail. 329 P.2d at 291. To the contrary,
in a long list of cases exemplifying governmental functions,
the court cited two cases from other States in which utilities
were required to pay relocation costs to make way for rail
lines. See id. at 290 (citing In re Delaware River Joint
Comm’n, 19 A.2d 278, 280 (Pa. 1941); Natick Gaslight Co.
v. Inhabitants of Natick, 56 N.E. 292, 293 (Mass. 1900)).
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.    11

    Significantly, in 1937—the same year that the Utilities
signed their first franchise agreement with the City of Santa
Ana—the California Legislature passed the Franchise Act,
which required utilities to “remove or relocate without
expense to the municipality any facilities . . . when made
necessary by any lawful change of grade, alignment, or
width of any public street . . . including the construction of
any subway or viaduct, by the municipality.” Cal. Pub. Util.
Code § 6297 (emphasis added); see 1937 Cal. Stat. 1781,
1785. That statute does not directly resolve this case because
OCTA is not a “municipality.” But the California Supreme
Court has explained that “most of the provisions” of the
statute should be understood as declaratory of the common
law. Los Angeles Cnty. Flood Control Dist. v. Southern Cal.
Edison Co., 333 P.2d 1, 5 (Cal. 1958). The statute thus
supports the conclusion that California common law has
traditionally required utilities to bear relocation costs when
governments construct subways. The Utilities do not offer,
and we do not see, any reason why above-ground rail lines
should be treated differently.
     The Utilities’ narrow characterization of governmental
functions is even more clearly inconsistent with more recent
California cases. As one California court has observed, “[a]
review of the cases interpreting . . . the common law indicate
an almost unanimous refusal to allow utility company
franchisees to recover reimbursement for equipment
relocation expenses.” Pacific Gas & Elec. Co. v. City of San
Jose, 218 Cal. Rptr. 400, 401–02 (Ct. App. 1985). Indeed,
the California Court of Appeal recently held that “[w]hatever
local government is authorized to do constitutes a function
of government,” not a proprietary function, so that any valid
exercise of governmental power places relocation costs on
utilities. Riverside Cnty. Transp. Comm’n, 268 Cal. Rptr. 3d
12    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

at 232 (alteration in original). We need not decide whether
the California Supreme Court would embrace that broad
proposition or whether, if it did, it would “contraven[e]
established property law” that existed at the time the Utilities
were granted their franchises. Stop the Beach
Renourishment, 560 U.S. at 733. For present purposes, it
suffices to observe that neither current nor historical
California law has embraced the proposition that the
construction of rail lines is per se non-governmental.
    In contending that constructing rail lines is a proprietary
function under California law—or, at least, that it was a
proprietary function at the time the Utilities signed their
franchise agreements in the late 1930s—the Utilities rely
heavily on two California Court of Appeal cases. Neither
supports their argument.
    In Postal Telegraph-Cable Co. v. City & County of San
Francisco, the California Court of Appeal held that San
Francisco owed an electric utility compensation for the cost
of relocating to make way for a “municipal street railway
system” because, the court noted, “it is conceded . . . that the
city and county of San Francisco, while engaged in the
operation of its municipal street railway system, is acting in
a proprietary and not in a governmental capacity.” 199 P.
1108, 1109 (Cal. Ct. App. 1921). In support of that
proposition, the court relied on an earlier decision holding
that “under the charter provisions concerning public utilities,
the city and county of San Francisco, through its board of
public works, is acting in a proprietary and not in a
governmental capacity” when purchasing and operating
buses. Vale v. Boyle, 175 P. 787, 790 (Cal. 1918); see Postal
Tel.-Cable, 199 P. at 1109.
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.     13

    The Utilities read Postal Telegraph-Cable as holding
that “the construction and operation of a municipal railway
system is a ‘purely proprietary activity.’” (quoting Postal
Tel.-Cable, 199 P. at 1110). But that case, like Vale, on
which it relied, held only that “the city and county of San
Francisco” acted in a proprietary capacity when
administering trains and buses. Postal Tel.-Cable, 199 P. at
1109 (emphasis added). The courts in those cases so held not
on the basis of any general, cross-jurisdictional rule that
trains are always proprietary, but rather based on a
construction of San Francisco’s “charter provisions
concerning public utilities.” Vale, 175 P. at 790.
    In consulting the city charter to determine whether the
transit project was governmental or proprietary, the courts
were simply applying the rule that whether a municipal
activity is governmental or proprietary turns partly on
whether a municipality is authorized to exercise the State’s
police powers—that is, on whether a municipality has
pursued a project in its capacity as an “instrumentality
intrusted by the state with the subordinate control of some
public affair.” Davoust v. City of Alameda, 84 P. 760, 761
(Cal. 1906); see also id. (explaining that a city acts in a
governmental character when it has been “made, by the state,
one of its instruments, or the local depositary of certain
limited and prescribed political powers, to be exercised for
the public good on behalf of the state” (quoting John F.
Dillon, 1 Commentaries on the Law of Municipal
Corporations § 66, at 88 (3d ed. 1881))).
    Those cases do not reflect “a view that operating a
railway could not be a governmental action, only that it was
not authorized by the municipal charter at issue in the case.”
Riverside Cnty. Transp. Comm’n, 268 Cal. Rptr. 3d at 240
(Raphael, J., concurring in part and dissenting in part). Here,
14    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

by contrast, it is undisputed that the California legislature
established OCTA, and it expressly did so for the broad
benefit of the region. See Cal. Pub. Util. Code. § 130001.
Postal Telegraph-Cable is therefore inapposite.
    The Utilities also rely on Coleman v. City of Oakland, in
which the California Court of Appeal stated that Oakland’s
operation of its airport was a proprietary function because
“[a]n air port falls naturally into the same classification as
such public utilities as electric light, gas, water, and
transportation systems, which are universally classed as
proprietary.” 295 P. 59, 61 (Cal. Ct. App. 1930). But that
case concerned the city’s tort liability, not an effort by the
city to invoke the right at the core of a utility’s obligation to
bear relocation expenses: the “paramount right of the people
as a whole to use the public streets wherever located.”
Southern Cal. Gas, 50 Cal. 2d at 717. The decision therefore
sheds little light on OCTA’s right to use the streets of Santa
Ana for the public benefit.
                               B
    In denying the Utilities a property interest that would
implicate the Takings Clause in these circumstances,
California law is consistent with traditional principles of
property law, historical practice, and Supreme Court
precedent. As the Supreme Court has explained, “the
traditional common law rule” is that “utilities have been
required to bear the entire cost of relocating from a public
right-of-way whenever requested to do so by state or local
authorities.” Norfolk Redevelopment & Hous. Auth., 464
U.S. at 35.
   The Court recognized that rule more than a hundred
years ago in New Orleans Gaslight Co., in which New
Orleans required a gas utility to relocate its facilities to
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.       15

permit the construction of a drainage project. 197 U.S. at
459. The Court observed that nothing in the franchise
agreement between the city and the utility indicated any
“intention of the State to give up its control of the public
streets.” Id. Relocation costs therefore fell on the utility, as
the city had the right to enact “proper regulations in the
interest of the public health, morals, and safety.” Id.
    A few years later, in Cincinnati, Indianapolis & Western
Railway Co. v. City of Connersville, a city laid a new road
across the tracks of a privately owned railroad, and the
Supreme Court held that the railroad could be required to pay
the costs of building a bridge over the new road. 218 U.S.
336, 343–44 (1910). The Court explained that “[t]he railway
company accepted its franchise from the State . . . subject
necessarily to the condition that it would conform at its own
expense to any regulations, not arbitrary in their character,
as to the opening or use of streets, which had for their object
the safety of the public, or the promotion of the public
convenience.” Id.
    Those early precedents demonstrate that the Utilities are
wrong to suggest that their franchises are subject only to
what they call a “limited relocation obligation” that does not
extend to relocating to permit the construction of a streetcar
line. Instead, for more than a hundred years, utilities have
been required to relocate to make way for a government that
seeks to vindicate its right to use the streets and enact “proper
regulations in the interest of the public health, morals, and
safety.” New Orleans Gaslight, 197 U.S. at 473. Indeed,
about ten years before the Utilities accepted the franchises at
issue here, a leading treatise on municipal powers explained
that “[t]he grantee of a franchise to use the streets takes it
subject to the right of the municipality to make public
improvements whenever and wherever the public interest
16    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

demands” because “the grant of a franchise is subject to any
proper exercise of the police power.” 4 Eugene McQuillin,
The Law of Municipal Corporations § 1806, at 793–94 (2d
ed. 1928) (emphasis added). The construction of a streetcar
line is just such an exercise. See Northern States Power Co.
v. Federal Transit Admin., 358 F.3d 1050, 1057 (8th Cir.
2004) (holding that a State did not need to reimburse a utility
for the costs of relocating to avoid light-rail construction
because the utility “merely had to move its facilities from
one portion of the street to another, and such regulation is
well within the state’s police powers” (citation omitted)).
    When it comes to a federal-law basis for their asserted
property interest, the best the Utilities can offer is City of Los
Angeles v. Los Angeles Gas & Electric Corp., 251 U.S. 32,
39 (1919). In that case, a Los Angeles ordinance authorized
the city to remove or relocate utility poles “when necessary”
to allow it to construct a lighting system. Id. at 34. The
Supreme Court held that the city committed a taking when it
forced an electric street-lighting utility to remove its
equipment so that the city could install its own utility serving
the same function. According to the Court, the city’s project
was non-governmental because it was not a valid use of the
State’s police powers. In forcing the electric utility to
relocate to make way for another electric utility, Los Angeles
had identified “no real ‘public necessity’ arising from
consideration of public health, peace or safety” because it
had not pointed to any “disorder or overcharge of rates or
peril, or defect of any kind” in the existing electric system
that would make a new utility appropriate. Id. at 38. In fact,
there was reason to suspect a self-serving motive because the
city wanted to replace “what belongs to one lighting system
in order to make way for another.” Id. at 40.
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.     17

    The Utilities seize on the Court’s use of the word
“necessity,” arguing that OCTA has failed to show that its
streetcar satisfies any public necessity. On the strictest
possible understanding of “necessity,” it seems that few, if
any, public projects would qualify—not even the sewer in
New Orleans Gaslight or the road in Cincinnati,
Indianapolis & Western Railway. Cf. M’Culloch v.
Maryland, 4 Wheat. (17 U.S.) 316, 325 (1819) (“[I]f
congress could use no means but such as were absolutely
indispensable to the existence of a granted power, the
government would hardly exist.”). But we do not read Los
Angeles Gas & Electric to invite us to make our own
assessment of whether a streetcar line is or is not necessary
for Orange County—the California Legislature, after all,
believes that the project serves valuable public purposes, and
the Utilities offer no reason for us to second-guess that
judgment. See Cal. Pub. Util. Code § 130001. Instead, Los
Angeles Gas & Electric stands for the same rule as the rest
of the Supreme Court’s cases in this line, and it is consistent
with other cases evaluating whether a state or local entity is
acting in a governmental or a proprietary capacity. See, e.g.,
Vale, 175 P. at 790 (examining the City and County of San
Francisco’s charter to determine whether San Francisco was
acting in a governmental capacity when it constructed a
streetcar line).
    The project at issue in Los Angeles Gas & Electric
apparently lacked any public-facing rationale, and it
therefore lost the status of “governmental.” OCTA’s project
has no comparable defect, or at least none the Utilities
identify. It is a governmental project that fits comfortably
within a long tradition of relocations for which franchisees
must foot the bill.
18    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

                               III
    Separate from any argument under the Takings Clause,
the Utilities also contend that the California Public Utilities
Code places the costs of relocation on OCTA. We disagree.
     Unlike the takings claim, over which we have federal-
question jurisdiction, see 28 U.S.C. § 1331, the state-law
claim is not independently subject to federal jurisdiction.
Rather, the district court exercised supplemental jurisdiction
over that claim because it is part of the “same case or
controversy” as the federal claim. See id. § 1367(a).
Ordinarily, “if the federal claims are dismissed before
trial . . . the state claims should be dismissed as well.” United
Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966);
see also 28 U.S.C. § 1367(c). Here, we have affirmed the
dismissal of the Utilities’ federal claim. But whether to
exercise supplemental jurisdiction over state-law claims
after federal claims are dismissed is a matter of discretion,
not subject-matter jurisdiction. See Acri v. Varian Assocs.,
Inc., 114 F.3d 999, 1000 (9th Cir. 1997) (en banc). We must
accordingly decide whether to retain state-law claims
according to “our normal rules of appellate procedure.”
Kohler v. Inter-Tel Techs., 244 F.3d 1167, 1171 (9th Cir.
2001) (quoting Government Emps. Ins. Co. v. Dizol, 133
F.3d 1220, 1225 (9th Cir. 1998) (en banc)).
    The parties in this case might have argued that the district
court should dismiss the supplemental state-law claim under
28 U.S.C. § 1367(c) in the event that it dismissed the federal
claim. But neither party so argued, either in the district court
or before us. We decline to excuse the parties’ forfeiture by
sua sponte disclaiming supplemental jurisdiction over the
state-law claim. See Kohler, 244 F.3d at 1171; Doe by Fein
v. District of Columbia, 93 F.3d 861, 871 (D.C. Cir. 1996)
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.       19

(“The discretionary aspect to supplemental jurisdiction is
waivable.”). We therefore proceed to consider the merits of
the state-law claim.
     The Utilities focus on California Public Utilities Code
section 40162, which provides that “[t]he district may
exercise the right of eminent domain . . . . [But] the district
in exercising such power shall . . . pay the cost of . . .
relocation of any structure . . . mains, pipes, conduits, cables
or poles of any public utility which is required to be moved
to a new location.” As is apparent from that statute’s
reference to “the district,” the provision applies not to OCTA
but to the Orange County Transit District, a separate regional
transit entity. It appears in a part of the Public Utilities Code
titled the “Orange County Transit District Act of 1965”
(Transit Act). Cal. Pub. Util Code. §§ 40020–40617; 1965
Cal. Stat. 4384.
    The Utilities argue that section 40162 nonetheless
creates duties for OCTA because of a separate part of the
Public Utilities Code, section 130241, which provides:

        All the provisions of the Orange County
        Transit District Act of 1965 . . . regarding the
        powers and functions of the Orange County
        Transit District shall be equally applicable to
        the Orange County Transportation Authority
        as if set forth herein, and shall be in addition
        to the powers and functions set forth in this
        division. The authority shall determine which
        provisions are applicable to the authority.

The Utilities’ argument founders on the last sentence of that
section: OCTA has not “determine[d]” that section 40162
shall “[be] applicable to” it. OCTA invoked a different
20    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

provision of the Transit Act, section 40180, as authority to
build the streetcar line and force the Utilities to relocate.
That provision says nothing about imposing the costs of
relocation on OCTA. Thus, as the district court concluded,
section 40162 does not apply to OCTA’s project here.
    The Utilities insist that section 40162 applies to OCTA
because the provisions of the Transit Act “shall be equally
applicable to” OCTA. Cal. Pub. Util. Code § 130241. They
acknowledge that “the authority shall determine which
provisions are applicable to the authority.” Id. But, on the
Utilities’ account, the only role of that sentence is to block
the application of those provisions that “by their nature may
not be capable of being applied to OCTA.”
    The Utilities’ reading is untenable because it effectively
erases the last sentence of section 130241, in conflict “with
the well-established principle that courts should, if possible,
give meaning to every word of a statute and avoid
constructions that make any word surplusage.” B.B. v.
County of Los Angeles, 471 P.3d 329, 337 (Cal. 2020). If a
provision in the Transit Act is “not capable” of applying to
OCTA, then OCTA has no need to “determine” whether the
provision is applicable; the provision would not apply
because it could not apply. In the same vein, we struggle to
identify any provisions in the Transit Act that “by their
nature may not be capable” of applying to OCTA. Under the
Utilities’ reading, then, the last sentence of the section has
no function.
    Insisting that their reading does not create this surplusage
problem, the Utilities offer section 40161 as an example of a
provision in the Transit Act that is not capable of applying
to OCTA. Section 40161 authorizes “[t]he district” to “sue
and be sued.” Cal. Pub. Util. Code § 40161. The Utilities say
      S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.      21

that OCTA “may not ‘sue and be sued’ in the name of [the
Orange County Transit District],” so section 40161 cannot,
by its nature, apply to OCTA. But that provision could apply
to OCTA if the “the authority” were substituted for “the
district.” That is the exact substitution that the Utilities ask
us to apply to section 40162.
    The Transit Act includes a range of provisions that could,
conceivably, apply to OCTA, such as a grant of power to
enter into contracts, Cal. Pub. Util. Code § 41065, conflict-
of-interest rules, id. § 40166, and a grant of eminent-domain
authority, id. § 40175. If the last sentence of section 130241
adds anything, it must allow OCTA to determine, in its
discretion, which provisions of the Transit Act—all of which
are potentially applicable to OCTA—should in fact apply.
OCTA has not chosen to subject itself to section 40162, so
the Utilities’ arguments about the duties imposed by that
section are unavailing.
                              IV
    Finally, OCTA asks that we order an award of pre- and
post-judgment interest. We decline to do so. Although its
counterclaim asserted an entitlement to pre-judgment
interest, OCTA did not mention interest in its motion for
summary judgment. The district court did not award pre-
judgment interest, and OCTA did not seek reconsideration
under Federal Rule of Civil Procedure Rule 59(e). See
Osterneck v. Ernst & Whinney, 489 U.S. 169, 177 (1989)
(explaining that a “postjudgment motion for discretionary
prejudgment interest is a Rule 59(e) motion”). More
importantly for our purposes, OCTA has not cross-appealed
the denial of pre-judgment interest, and we “may not alter a
judgment to benefit a nonappealing party.” Lopez v.
Garland, 60 F.4th 1208, 1212 (9th Cir. 2023) (quoting
22    S. CAL. EDISON CO. V. ORANGE COUNTY TRANSP. AUTH.

Greenlaw v. United States, 554 U.S. 237, 244 (2008)). On
the other hand, because we affirm the district court’s
judgment, post-judgment interest is automatically available
to OCTA, and there is no need for us to order it. 28 U.S.C.
§ 1961(a); Fed. R. App. P. 37(a); see Waggoner v. R.
McGray, Inc., 743 F.2d 643, 644 (9th Cir. 1984) (“Interest
accrues from the date of a judgment whether or not the
judgment expressly includes it . . . .”).
     AFFIRMED.