On August 2, 2004, the California Court of Appeal ruled in Bello v. ABA Energy Corporation, that an energy company was not required to obtain landowner consent before installing a gas pipeline in a "public right of way" on private property. The ruling could prove significant for energy providers or other utility services who build and install pipelines or other transmission infrastructure using public rights-of-way particularly in rural parts of the State. The scope of permitted uses for public rights-of-way has been largely untested in California law since the turn of the prior century but has great currency as California continues to grow and urbanize.

The plaintiffs in Bello were owners of large tracts of agricultural land in Solano County. At issue was a thirty-foot wide strip of those landholdings that was subject to a public right-of-way in favor of Solano County. Solano County had paved a road on part of the right-of-way, and the balance remained unpaved. ABA Energy sought to use the unpaved portion of the right-of-way to construct a four-mile pipeline to connect its natural gas wells with Pacific Gas & Electric Company's metering station. After obtaining a right-of-way encroachment permit from Solano County, ABA Energy constructed the pipeline. ABA Energy did not obtain the landowners' permission. After construction, the landowners sued alleging that the pipeline constituted a trespass. The landowners sought damages and an injunction requiring ABA Energy to remove the pipeline.

After a non-jury trial, the trial court ruled that ABA Energy had trespassed on the landowners' property. According to the trial court, the pipeline was not a proper use of the right-of-way because it was not "incidental to the road purposes for which the right-of-way was acquired by the county." In other words, the right-of-way permitting road construction did not authorize installation of a natural gas pipeline. According to the trial court, ABA Energy was required to obtain the landowners' consent to install the pipeline. Having failed to obtain the landowners' consent, ABA Energy had trespassed. The trial court awarded the landowners nominal damages.[fn1] ABA Energy appealed.

The court of appeal reversed and found that ABA Energy had not trespassed the landowners' property. The appellate court also affirmed Solano County's issuance of the encroachment permit, finding that the pipeline served the public use and did not interfere with the landowners' use of their property. Several aspects of the Bello court's opinion provide important guidance that may be relevant to private and public utilities relying on public rights-of-way, particularly those rights-of-way existing alongside rural streets or highways.

Broad Access To Rights-Of-Way In Urbanized Regions

In Bello, the court was forced to reconcile two competing lines of case law, both with roots in early California history. The first line of cases arose from the Supreme Court's late-1800s decision in Montogmery v. Railway Company, 104 Cal. 186 (1894). Emphasizing the urbanized nature of city streets (as distinct from rural county roads), the Montgomery court held that a street-car railway constructed on public streets did not require the landowners' permission, but was instead within a wide range of permissible uses that city streets had been subjected to, including "construction of sewers and drains, laying of gas and water pipes, erection of telegraph and telephone wires, and a variety of other improvements."[fn2] Such uses, the Montgomery court noted, are "essential to the enjoyment of streets in cities and to the comfort of citizens in their more densely populated limits."[fn3]

The Montgomery standard is contrasted by the more restrictive standard set out in a second line of cases that stem from the California Supreme Court's decision in Gurnsey v. Northern Cal. Power Co., 160 Cal. 699 (1911). There, the court held that the defendant's installation of electrical transmission poles and lines in the right-of-way along a "public wagon road" constituted a trespass because the electrical lines did not serve "purposes incidental to the effective use by the public of the highway."[fn4] According to the Gurnsey court, a right of way only permitted activities that are "incidental to the effective use" of the original purpose of the right-of-ways. Any activities outside this scope require the landowner's permission.

In finding that ABA Energy had trespassed, the trial court in Bello apparently followed the more restrictive Gurnsey standard. The court of appeal, however, found that that the Montgomery line of cases controlled where, as in this case, urban development had additional public demands on the use of public rights-of-way. The more restrictive Gurnsey rationale, the court concluded, applied "only to rights-of-way that have yet to be subjected to the ‘other and further uses' that are incident to modern development."[fn5] The court stated that "even . . . rural portions of the San Francisco Bay Area are now subject to the intensive use described in Montgomery,"[fn6] and "[r]ural Solano County is no exception."[fn7] The Bello court found it noteworthy that Solano County was no more than forty-five miles from San Francisco and Sacramento, both "large urban areas," and that Solano County itself had a population of over 400,000.[fn8] The court also found persuasive the fact that AT&T had already installed a fiber-optic cable on the other side of the road. According to the Bello court, this demonstrated the "advance of public services into the Solano County countryside," thus justifying application of the broader Montgomery standard.[fn9]

Case-By-Case Flexible Approach

The Bello court did not establish any hard and fast rules. Thus, whether a particular right-of-way will be evaluated under the Montgomery standard or the more restrictive Gurnsey standard remains a case-specific inquiry. This "flexible approach," the Bello court noted, was consistent with the trend started by Montgomery, and with decisions reached by most courts in other states.[fn10] Under the Bello court's analysis, the most important factor appears to be whether the right-of-way has been previously tapped for "other and further uses," for example, sewers, drains, gas and water pipes, and telegraph and telephone wires. But the Bello court provided little guidance on whether it would have reached the same conclusion had the road been located in more rural area of California or had AT&T not installed a fiber optic line. Still, Bello appears to send a strong message that any rights-of-way along roads in counties near urban areas will likely be considered under the broad Montgomery standard, and if the right-of-way has already been used for "other uses," the broad standard is likely to apply.

Landowners' Use Of Property Is Not Controlling

Also significant in the Bello court's decision is that it did not find the landowner's use of the property controlling, or even relevant, to determining the scope of the public right-of-way. The court, in fact, rejected the apparent contention that the landowners' agriculture use of their property made it remote like the road in Gurnsey.[fn11] Likewise, the court readily disposed of the criticism that the scope of the public right-of-way should not depend on factors outside the landowners' control. The "right of the owner," the court stated, "may grow less and less as the public needs increase."[fn12] "The establishment of a public highway practically divests the owner of a fee to the land . . . out of the entire present beneficial interest of a private nature which he ahs therein. It leaves him nothing but the possibility of a reinvestment of his former interest in the case the highway should be discontinued as such . . . ."[fn13] The court also found it important that "the ‘modern' trend . . . is to construe public rights of way to accommodate technological advancement in the conveyance of goods and people . . ."[fn14] Thus, "where intensive use of the rights-of-way is necessary to support public infrastructure, ‘the use by the owner of the fee must yield to the public use.'"[fn15]

Private Company Has Equal Access To Public Right Of Way

The Court also rejected the landowners' argument that ABA Energy should be denied use of the right-of-way because it is a private company rather than a public utility. The court noted that fundamentally, "every member of the public has an equal right in the use of a public right-of-way."[fn16] The court found it significant that Streets and Highways Code, which gives county governments the right to issue encroachments permits in county rights-of-way, "expressly anticipates that encroachment permits will be granted to private users."[fn17] Thus, the court found "no statutory or doctrinal basis for a per se exclusion of private users from below-ground rights-of-way."[fn18] This is not to say, of course, that there will never be a meaningful difference between a public utilities' use of a right of way and a private entity's use. While there is apparently no "established uniform criteria" for determining the propriety of a permitted use of a public right-of-way, the Bello court noted that the proposed use should (1) serve as a means for the transport or transmission of people, commodities, waste products or information, or serve the public safety, (2) serve either the public interest or a private interest of the underlying landowner which does not interfere with the public's use rights, and (3) not unduly endanger or interfere with use of the abutting property.[fn19] Thus, a private company (and, for that matter, a public company), must meet these criteria in order to obtain an encroachment permit for a county right-of-way. But Bello makes it clear that assuming this criteria is satisfied, it is irrelevant that the particular user of the right-of-way is a private, as opposed to a public, entity.

Express Grant Language Not Necessary

The court also rejected the landowners' argument that there was no evidence of the actual grant of the right-of-way. "Specific language," the court stated, "has never been required in California to establish the scope of a public right of way."[fn20] The court also noted that because many rights-of-way originated many years ago, "it may be difficult or impossible to locate the original grant language," and even where the original grant language can be located, "the scope of the right-of-way is often expressed in very summary language," for example, "for public highway purposes."[fn21] The court thus concluded that evidence of the grant language was not required to establish the scope of the right-of-way, and that, absent express grant language, the common law would determine the scope.[fn22]

Local Agency's Interpretation Of Encroachment Permit Entitled To Deference

The landowners' final argument—rejected by the Bello court—was that Solano County's encroachment permit required ABA Energy to obtain the landowners' permission to install the pipeline. One of the permit's "standard" conditions was that ABA Energy "be responsible for obtaining all other necessary permits and permissions from affected property owners, public agencies, and others."[fn23] The landowners argued that this required ABA Energy to obtain their permission. During the bench trial, however, a county representative testified that this condition was intended to ensure that ABA Energy "was aware of its responsibility to obtain the permission of other public agencies or private persons or entities, if that permission was legally required."[fn24] The Bello court held that this construction was reasonable, and that the plain meaning of the permit condition required permission from affected landowners only where "necessary," which meant only where "some independent legal ground exists" making permission a requirement.[fn25] The court indicated that the County's interpretation of its own condition language was entitled to deference.

Although Bello leaves many questions unanswered, it provides guidance to companies considering use of public rights-of-way. Some of the more major considerations include:

• Investigate whether the public right-of-way has already been subjected to "further uses."
• Do not overestimate the urbanized nature of the region. While Bello speaks expansively about the spread of urban services into rural areas, it only evaluated a single road in the greater San Francisco Bay Area. Many other areas in California have not undergone the type of urban expansion that the court found noteworthy in Bello.
• Discover and evaluate the original right-of-way grant language. Under Bello, in the absence of express language, the common law (i.e., the Montgomery and Gurnsey standards) will dictate the scope of the right-of-way. But the Bello court did not exclude the possibility that express grant language could limit the scope of the permitted uses.
• Understand the encroachment permit. In Bello, a county representative testified about the meaning of the encroachment permit's "all other necessary permits and permissions" condition. Fortunately for ABA Energy, this testimony was favorable to it. It is far from certain, however, that other governmental agencies would construe this condition in similar fashion.
• Gurnsey remains good law. The restrictive standard in Gurnsey that could easily lead to the need to obtain landowner permission remains good law. Companies should exercise caution when relying on Bello or Montgomery to conclude that a landowner's permission is not required before using a right-of-way, even if the company has obtained governmental permits authorizing the proposed use.

The Bello decision was published in August and does not become final in that court for 30 days. It remains subject to review, modification or reconsideration by the Court of Appeal and thereafter may be reviewed by the California Supreme Court. The status of the case should be checked before relying on its holding.

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Footnotes

1: The trial court determined that only nominal damages were appropriate because there was no evidence that the pipeline diminished the property value, and the pipeline did not interfere with the landowners' use of the land. The trial court also denied the landowners' request to have the pipeline removed, finding that ABA Energy installed the pipeline in good faith, and that the "balance of hardships" weighed against the landowners' request.

2: Montogmery, 104 Cal. at 189.

3: Id.

4: Gurnsey, 160 Cal. at 705.

5: Bello, 2004 WL 1719344, at *3 (quoting Montgomery, 104 Cal. at 189).

6: Id.,

7: Id. at *7.

8: Id. at *7, fn.3.

9: Id. at *7.

10: Id. at *6-7

11: Id. at *7, n.3.

12: Id. at *7 (quoting Colegrove W. Co. v. City of Hollywood, 151 Cal. 425 (1907)).

13: Id. at *11 (quoting Montgomery, 104 Cal. at 193)

14: Id. at *7.

15: Id. at *4 (quoting Colegrove, 151 Cal. at 430).

16: Id. at *8.

17: Id. (citing see also Cal. Streets & High. Code §§ 1460, 1463).

18: Id.

19: Id.

20: Id. at *9.

21: Id.

22: Id. at *10.

23: Id.

24: Id.

25: Id. at *10-11.