City of Albuquerque v. PUBLIC REGULATION, 27,527.

• Decision Date: 30 September 2003
• Docket Number: No. 27,527.,27,527.
• Citation: 2003 NMSC 28,79 P.3d 297,134 N.M. 472
• Parties: CITY OF ALBUQUERQUE, City of Santa Fe, County of Santa Fe, County of Bernalillo, Santa Fe Northwest Advisory Council, Energy Conscious Homeowner's Organization, Hacienda del Cerezo, Ltd., and Moss Farms L.L.C., Appellants, v. NEW MEXICO PUBLIC REGULATION COMMISSION and Public Service Company of New Mexico, Appellees, and New Mexico Industrial Energy Consumers, Intervenor.
• Court: New Mexico Supreme Court

79 P.3d 297

134 N.M. 472

2003 NMSC 28

CITY OF ALBUQUERQUE, City of Santa Fe, County of Santa Fe, County of Bernalillo, Santa Fe Northwest Advisory Council, Energy Conscious Homeowner's Organization, Hacienda del Cerezo, Ltd., and Moss Farms L.L.C., Appellants, v. NEW MEXICO PUBLIC REGULATION COMMISSION and Public Service Company of New Mexico, Appellees, and New Mexico Industrial Energy Consumers, Intervenor.

No. 27,527.

Supreme Court of New Mexico.

September 30, 2003.

Rehearing Denied October 29, 2003.

Nann Houliston, Tito D. Chavez, Merry P. Stubblefield, Albuquerque, NM, Robert D. Kidd, Jr., Steven Kopelman, Santa Fe, NM, Margot J. Steadman, Corrales, NM, for Appellants.

Lee W. Huffman, Associate General Counsel, Santa Fe, NM, Carol Smith Rising, Albuquerque, NM, for Appellees.

OPINION

SERNA, Justice.

{1} The Cities of Albuquerque and Santa Fe and the Counties of Bernalillo and Santa Fe, among others, (collectively, the Local Governments) appeal the approval of a tariff by the New Mexico Public Regulation Commission (PRC) that allows Public Service Company of New Mexico (PNM) to recover costs incurred in complying with any local ordinance to place utility systems underground, including placing new systems underground or converting existing overhead systems to underground systems. The Local Governments raise a number of issues on appeal: (1) the tariff violates the common law rule that utilities bear the expense of relocating lines and facilities as a result of municipal or county improvement projects; (2) the tariff interferes with their police powers by permitting PNM to disregard local ordinances; (3) the tariff violates the principle of separation of powers by exceeding the PRC's statutory authority; (4) the tariff impermissibly results in discriminatory rates; (5) the tariff violates the anti-donation clause of the New Mexico Constitution; and (6) the tariff violates the Procurement Code. We agree with the Local Governments that the tariff, in its current form, violates the common law rule that permits a municipality to require relocation in certain circumstances at a utility's own expense; however, we believe it is also necessary to address whether the Legislature intended to authorize the PRC to displace the common law rule. On this question, we conclude that the Legislature has not expressed such an intent. Therefore, we conclude that the tariff, as presently drafted, unduly infringes upon the police power of local governments, is inconsistent with the common law rule regarding relocation, and exceeds the PRC's statutory authority because it does not contain an exception that would categorize local improvement projects necessitated by public health and safety as a cost of service. As a result, we vacate the tariff.

I. Local Police Power and the Common Law of Relocation

{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....