Northwest Natural Gas Co. v. City of Portland

Decision Date26 November 1985
Citation711 P.2d 119,300 Or. 291
PartiesNORTHWEST NATURAL GAS CO., Pacific Power & Light Co., Pacific Northwest Bell, and General Telephone Company of the Northwest, Petitioners on review, v. CITY OF PORTLAND, County of Multnomah, Tri-County Metropolitan Transportation District, Respondents on review, State of Oregon, Defendant, Portland General Electric Company, Petitioner on review. CC A8302-00967; CA A28765; SC S31336.
CourtOregon Supreme Court

Jacob Tanzer, Portland, argued the cause for petitioners on review. With him on the petition were Ball, Janik & Novack, and Warren Hastings, Jr., Portland.

Jeffrey L. Rogers, City Atty., Portland, argued the cause for respondent on review City of Portland. With him on the response to the petition were Ruth Spetter, Lynda Nelson Gardner and Kathryn Beaumont Imperati, Deputy City Attys., Portland.

Paul L. Meyer, of Kobin & Meyer, P.C., Portland, argued the cause for respondents on review County of Multnomah and Tri-County Metropolitan Transp. Dist. On the response to the petition were John Leahy, Portland, for County of Multnomah, and Susan G. Whitney, of Kobin & Meyer, P.C., Portland, for Tri-County Metropolitan Trans. Dist.

JONES, Justice.

This is a proceeding for declaratory relief arising from a dispute between five public utilities (plaintiffs) and the City of Portland, Multnomah County and the Tri-County Metropolitan Transit District (Tri-Met) Four investor-owned public utilities, Northwest Natural Gas (NNG), Pacific Power and Light (PP & L), Pacific Northwest Bell (PNB) and General Telephone (Gen Tel) (the "plaintiff utilities"), sought a declaration that defendants City of Portland and Multnomah County could not require uncompensated obedience to the defendants' orders to the utilities to relocate their facilities to accommodate Tri-Met's construction of the LRT system. Defendants counterclaimed, adding Portland General Electric (PGE) as a party seeking a declaration that defendants may require the plaintiff utilities and PGE (collectively, the "utilities") to relocate their facilities without compensation.

                (defendants). 1  The issue is whether the City of Portland has legal authority to compel the utilities to relocate or adjust their existing utility facilities within the public rights-of-way without compensation to accommodate the construction of a light rail transit (LRT) system
                

The trial court issued a judgment declaring, in essence, that defendants City of Portland and Multnomah County may require the utilities to relocate their facilities within the public rights-of-way without reimbursement for the purpose of accommodating the LRT system and related public improvements.

The Court of Appeals reversed and remanded that part of the trial court judgment which required uncompensated relocation of facilities within the Multnomah County segment of the LRT system. 2 The judgment was affirmed in all other respects. Northwest Natural Gas Co. v. City of Portland, 70 Or.App. 647, 657, 690 P.2d 1099 (1984). Review is limited to the issue of whether the utilities are entitled to compensation for relocation of their facilities that lie within the public rights-of-way in the City of Portland. 3 We hold that the utilities are not entitled to compensation for relocation costs.

HISTORY

Tri-Met is a municipal corporation of the State of Oregon formed pursuant to ORS chapter 267. Tri-Met provides and operates a mass transit system in the Tri-County Portland metropolitan area. It succeeds the privately owned bus and streetcar company, Rose City Transit Company. In cooperation with the City of Portland, Multnomah County and the Highway Division of the Oregon Department of Transportation, Tri-Met is constructing the LRT system to provide public transit between downtown Gresham and downtown Portland.

The light rail transit project culminates a lengthy planning process involving area-wide governmental consultation and public participation. The effort to develop a mass transit solution for the Banfield Corridor was launched after the proposed Mt. Hood freeway was abandoned. The Banfield Light Rail Transit Project was selected from among the top five of 30 alternative proposals. Environmental concerns, including the potential effect on pollution, and economics were considered during the study leading to the choice of the Banfield LRT plan. The trial court took "judicial notice" that the LRT system serves a public purpose. The plaintiff utilities stipulated that the LRT system serves an "important public purpose."

The LRT project is in four segments: (1) Gresham; (2) Multnomah County (East Burnside); (3) I-84 (Banfield) and I-205; and (4) the City of Portland. The Portland segment, the segment that concerns us in this case, runs from I-84 along Holladay Street and across the Steel Bridge to downtown Portland. There it follows First Avenue Each of the utilities doing business within the city receives authority to operate and maintain facilities in the public rights-of-way from a different source.

to Morrison to Eleventh Avenue, where it circles over to Yamhill Avenue and returns to First Avenue. The major utility involvement is in the downtown area.

NNG operates as successor to an 1859 territorial grant from the territory of Oregon authorizing Henry B. Green to lay gas pipes and apparatus throughout the city. The grant is indefinite as to duration. The franchise is silent on the matter of relocation or relocation costs.

PNB operates in Portland under a revocable permit granted to its predecessor, Pacific Telephone and Telegraph Company, in 1932. Unlike the franchise under which NNG operates, the revocable permit is not silent on the matter of relocation. Section 7 of the permit states in pertinent part:

"Nothing in this revocable permit shall be construed to prevent the City from constructing sewers, grading, paving, planking, repairing and/or altering of any street, alley or avenue, or the laying down or repairing of water mains, or the construction of any other public work by the City. * * * If any of the wires, cables, appliances or conductors or conduits of the grantee herein shall be placed in any of the streets, alleys, avenues and/or public places or grounds of the City so as to directly interfere with the construction of any public improvement, whether it be the construction of a sewer, improvement of a street or the laying of a water main, all such poles, wires, cables, appliances and conduits shall be removed or replaced in such manner and as shall be directed by the City so the same shall not interfere with said public work of the City, and such removal shall be at the expense of the grantee herein." (Emphasis added.)

PP & L operates under a 1966 ordinance granting PP & L a 20-year franchise to use city rights-of-way for conducting electricity and maintaining facilities. Section 3 of the franchise provides:

"The City shall have the right to require the grantee to change the location of any pole, conduit, structure or facility within the street area when the public convenience requires such change and the expense thereof shall be paid by the grantee." (Emphasis added.)

Section 5 provides:

"Nothing in this franchise shall be construed to prevent the City from constructing sewers, grading, paving, repairing and/or altering any street, alley or public highway, or laying down, repairing or removing water mains or constructing or establishing any other public work. * * * All such poles, wires, conduits, manholes, or other appliances and facilities shall be removed or replaced in such manner as shall be directed by the City so that the same shall not interfere with the said public work of the City and such removal or replacement shall be at the expense of the grantee herein." (Emphasis added.)

PGE and the city stipulated, for the purposes of this case, that any franchise agreement under which PGE operates in the city "expressly reserves to the City of Portland the full police power over such public streets."

THE RELEVANT PLEADINGS

Counts I and III of the utilities' complaint are the only ones pertinent to our review. Count I of the complaint for declaratory judgment alleges that the defendants (all four defendants are named in the complaint) "are without authority to compel uncompensated relocation by public utilities of their facilities for the proprietary purpose of accommodating a transit system."

Count III alleges that a requirement of uncompensated relocation constitutes a taking of private property in violation of the utilities' rights under Article I, section 18, and Article XI, section 4, of the Oregon Constitution, 4 and the Fourteenth Amendment to the United States Constitution.

COUNT I --Alleging that Tri-Met must compensate the utilities for relocation costs because it will operate its LRT system as a proprietary function.

Count I of the plaintiff utilities' complaint alleges that the defendants are without authority to compel uncompensated relocation because Tri-Met was acting for the proprietary purpose of constructing a transit system. To support Count I, the utilities rely heavily on Multnomah County v. Rockwood W. Dist., 219 Or. 356, 361, 347 P.2d 110 (1959), in which this court stated:

"It is an almost universal common-law rule that private utility companies are required to move at their own expense their water, electric and other lines, subject to the police power of the state, and whenever the health and public safety require this to be done, unless they are covered by special ordinance or law. Transit Commission v. Long Island Railroad Co., 253 NY 345, 171 NE 565 [1930]; New Orleans Gaslight Co. v. Drainage Commission of New Orleans, 197 US 453, 25 S Ct 471, 49 L ed 831 [1905].

"The above rule does not, however, extend so far as to put the cost of relocation upon a private utility company when the change is for the benefit of other private utility companies or...

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