Northern States v. MN Depart. of Trans.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-1517
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Northern States Power Company, *
doing business as Xcel Energy, *
*
Plaintiff-Appellant, *
*
v. *
*
Federal Transit Administration; *
* Appeal from the United States
Defendant, * District Court for the
* District of Minnesota.
Minnesota Department of Transporta- *
tion; Elwyn Tinklenberg, Commis- *
sioner of Transportation, individually *
and officially; Minnesota Metro- *
politan Council; State of Minnesota, *
*
Defendants-Appellees. *
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Submitted: December 17, 2003
Filed: February 20, 2004
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Before WOLLMAN, LAY, and RILEY, Circuit Judges.
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LAY, Circuit Judge.
The Minnesota Department of Transportation (“MnDOT”) ordered Northern
States Power, doing business as Xcel Energy (“Xcel”), to relocate its underground
utility facilities beneath Fifth Street in downtown Minneapolis to make way for the
Hiawatha Light Rail Transit project (“LRT”). Xcel filed suit for declaratory and
injunctive relief, contesting MnDOT’s authority to give such an order and asserting
that it was entitled to the costs of relocation of its facilities. The district court
dismissed Xcel’s claims against all Defendants on summary judgment, holding that
MnDOT had the authority to order relocation and that Xcel must pay for the
relocation of its utility facilities. Xcel appeals, and we affirm.
I. BACKGROUND
Xcel supplies electricity to the City of Minneapolis (“City”). Many of the
facilities necessary for the distribution of electricity to downtown consumers are
located beneath Fifth Street. Xcel’s right to use Minneapolis streets for its facilities
is secured by a Franchise Agreement with the City. Xcel pays the City over $15
million per year for the franchise.
The LRT is an 11.6 mile light rail train project connecting downtown
Minneapolis, the Minneapolis/St. Paul International Airport, and the Mall of America,
a large-scale commercial shopping center located in the nearby suburb of
Bloomington, Minnesota. The downtown section of the LRT route includes a portion
of Fifth Street. MnDOT, a state agency, is responsible for design and construction
of the project. Upon completion, the LRT will be owned and operated by the
Minnesota Metropolitan Council (“Met Council”), a public corporation and political
subdivision of the state. The LRT project will cost an estimated $675.4 million, $334
million of which is to be funded by the Federal Transit Administration (“FTA”), an
agency within the United States Department of Transportation.
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In order to accommodate the LRT, Xcel’s Fifth Street facilities needed to be
relocated. On November 29, 2000, MnDOT ordered Xcel to submit a plan and
schedule for relocation of its facilities within thirty days, cautioning that all relocation
work must be completed by February 1, 2002. Although the thirty-day deadline was
later extended, Xcel did not submit a plan to relocate. Instead, Xcel filed suit in
federal district court1 against the FTA, the Met Council, MnDOT, the State of
Minnesota, and the Commissioner of MnDOT, Elwyn Tinklenberg. Xcel’s Complaint
alleged that: 1) the FTA was required by law to submit a supplemental Environmental
Impact Statement, reflecting MnDOT’s intention to “pave over” Xcel’s facilities;
2) MnDOT, Met Council, and Tinklenberg violated Xcel’s procedural due process,
substantive due process, and equal protection rights, and also effected an
unconstitutional taking; 3) MnDOT, Met Council, and Tinklenberg violated Xcel’s
right to reimbursement under the Franchise Agreement and Minn. Stat. § 161.46; and
4) MnDOT’s order to relocate was an invalid exercise of state power.
Thereafter, in order to keep the LRT project on schedule, the Defendants
moved for a preliminary injunction to compel Xcel to relocate its facilities in one part
of Fifth Street. The district court granted the injunction, N. States Power Co. v. Fed.
Transit Admin., Civ. No. 01-295, 2001 WL 1618532 (D. Minn. May 24, 2001)
(unpublished), and this court upheld the decision on appeal. N. States Power Co. v.
Fed. Transit Admin., 270 F.3d 586 (8th Cir. 2001).2
1
The Honorable John R. Tunheim, United States District Judge for the District
of Minnesota.
2
This preliminary injunction only concerned that part of Fifth Street to the east
of Nicollet Avenue. MnDOT subsequently ordered Xcel to also move its facilities
for that part of Fifth Street to the west of Nicollet Avenue, establishing a deadline that
was later found to be “unreasonable” by the Minnesota Court of Appeals. See N.
States Power Co. v. Minn. Dep’t of Transp., 2002 WL 2004718 (Minn. Ct. App.,
Sept. 3, 2002) (unpublished). It appears, however, that despite this ruling, Xcel has
gone ahead with the work needed to relocate its facilities to the west, as well as the
east, of Nicollet Avenue.
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Following discovery, all Defendants moved for summary judgment. On
September 10, 2002, the district court granted summary judgment, dismissing all of
Xcel’s claims. The district court held that: 1) Xcel’s claim against the FTA was moot
because the facility relocation was either completed, or in the process of being
completed, and therefore there was no longer a threat that MnDOT would “pave over”
Xcel’s facilities; 2) MnDOT had the authority to exercise the state’s police powers
to order Xcel to relocate its facilities; 3) neither Minn. Stat. § 161.46 nor the
Franchise Agreement provided for reimbursement under these circumstances; 4) Xcel
failed to plead the issue of whether MnDOT’s regulations were unreasonable;
5) Xcel’s constitutional claims were without merit; and 6) the Eleventh Amendment
barred claims against MnDOT Commissioner Tinklenberg.
Xcel now appeals the following issues from the district court’s grant of
summary judgment: 1) that its Franchise Agreement with the City establishes a right
to reimbursement; 2) that MnDOT lacks the authority to exercise the state’s police
powers to order Xcel to remove its facilities; 3) that its Complaint satisfied notice
pleading requirements, asserting MnDOT’s regulations were unreasonable; 4) that its
due process and takings claims are valid; and 5) that its claims against Commissioner
Tinklenberg are not barred by the Eleventh Amendment.
II. DISCUSSION
A. Standard of Review
We review the district court’s grant of summary judgment de novo. Girten v.
McRentals, Inc., 337 F.3d 979, 981 (8th Cir. 2003). We must view the record in the
light most favorable to Xcel, and give Xcel the benefit of all reasonable inferences.
Viking Supply v. Nat’l Cart Co., 310 F.3d 1092, 1096 (8th Cir. 2002).
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B. Cost of Relocation
The Supreme Court has clearly stated 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 and Hous. Auth. v. Chesapeake & Potomac Tel. Co. of Va., 464 U.S.
30, 35 (1983) (citing New Orleans Gas Light Co. v. Drainage Comm’n of New
Orleans, 197 U.S. 453, 462 (1905)). Minnesota courts recognize the same rule. See
Stillwater Co. v. City of Stillwater, 52 N.W. 893, 894 (Minn. 1892); N. States Power
Co. v. City of Oakdale 588 N.W.2d 534, 542 (Minn. Ct. App. 1999) (holding that no
compensation was due to the utility company in light of “the long-held view that a
city may regulate a utility without compensation in valid exercise of its police
power”).
Xcel seeks to avoid this undisputed precedent by focusing on the Franchise
Agreement. Xcel maintains that § 7 of that agreement specifically provides for
payment of relocation costs to Xcel under these circumstances. It states in relevant
part:
Except where required solely for a City improvement project, the
vacation of any public way, after the installation of electric facilities,
shall not operate to deprive [Xcel] of its rights to operate and maintain
such electrical facilities, until the reasonable cost of relocating the same
and the loss and expense resulting from such relocation are first paid to
[Xcel].
(Appellant’s App. at 811.) Xcel argues that this express contractual provision in the
Franchise Agreement “overrides” the common law rule, and therefore the district
court’s reliance on New Orleans Gas Light was reversible error.
Xcel’s arguments are not persuasive. Even assuming that the Franchise
Agreement is controlling and creates a legal right that could be enforced against the
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Defendants,3 it does not provide for reimbursement under these circumstances
because the City did not vacate Fifth Street.
The district court was correct to note that under the Minneapolis Charter and
the Ordinances, vacation is a formal act of the Minneapolis City Council. Chapter 8,
Section 3 of the Minneapolis Charter provides that vacation may only occur upon a
two-thirds vote of the City Council:
Section 3. Vacation of Streets. The City Council may also by a vote of
two-thirds of the members thereof vacate any highway, street, lane or
alley, or portion of either and such power of vacating highways, streets,
lanes and alleys within the City of Minneapolis is vested exclusively in
said City Council, and no court or other body, or authority shall have
any power to vacate any such highway, street, lane or alley, nor any plat
or portion of any plat of lands within said City.
Minneapolis, Minn., City Charter ch. 8, § 3. Likewise, the Minneapolis City
Ordinances4 require that a number of formal steps be taken before vacation may
occur, including: 1) the referral of any proposed vacation to the planning commission
for investigation and report; 2) an investigation and a report and recommendation by
the commission on the proposed vacation; 3) a public hearing, if thought necessary
3
Because we hold that the Franchise Agreement does not provide for
reimbursement to Xcel under these circumstances, we do not need to decide two
additional issues raised by the Defendants that present potential obstacles to the relief
Xcel seeks: 1) whether any of the Defendants can be held liable for relocation costs
under the terms of a contract to which none of them is a party; and 2) in light of the
established principle of municipal law that, as a creature of the state, a municipality
cannot bind or control the state without the express consent of the state, see Watson
Constr. Co. v. City of St. Paul, 109 N.W.2d 332, 334 (Minn. 1961), whether the
Franchise Agreement is even relevant to MnDOT’s exercise of police powers
expressly delegated to it by the state.
4
Chapter 433 of the Minneapolis City Ordinances specifically cross references
the City Council’s power to vacate under Chapter 8, Section 3 of the City Charter.
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by either the City Council or the planning commission; 4) an application, including
a plat specifically delineating the right-of-way to be vacated, filed with the City Clerk
by the person or entity requesting vacation; and 5) a $300 application fee to be paid
by the person or entity requesting vacation. Minneapolis, Minn., Code of Ordinances
ch. 433 §§ 433.10 to 433.50. Only after these steps are taken may the City vacate a
public way under the City Ordinances. See id. It does not appear that these steps
were taken in this case.
The district court was also correct to note that Minnesota courts have identified
vacation to be a formal act which releases the public’s entire interest in the right-of-
way, reverting ownership of the land occupied by the street to the abutting
landowners. See McCuen v. McCarvel, 263 N.W.2d 64, 65-66 (Minn. 1978)
(explaining that, upon vacation, the land occupied by the right-of-way reverts to the
fee owners of the land next to the right of way); In re Hull, 204 N.W. 534, 537 (Minn.
1925) (“The vacation of a street has several consequences[,]” including “releas[ing]
the estates of abutting landowners from the public easement in the land between the
street lines.”); Lamm v. Chicago, St. P., M. & O. Ry. Co., 47 N.W. 455, 458 (Minn.
1890) (stating that vacating a street constitutes “giving up and releasing the entire
interest of the public in it”).
Xcel argues that the City Council did satisfy the formal procedures for vacating
the street by voting 12-0 for vacation. A close review of the record, however, reveals
that the issue of vacation was never before the City Council. The vote to which Xcel
refers in its brief is simply a vote to authorize City officers to execute a “Construction
Cooperation Agreement.” (Appellant’s App. at 1614-15.) Again, there was no
evidence that the vacation procedures were followed here.
Xcel also argues that the word vacation is not capitalized in the Franchise
Agreement, and it should therefore be interpreted under its normal meaning and not
by reference to any formal procedure. This argument is not particularly convincing,
given that “vacation” is not capitalized in the Charter or Ordinances either. Also, the
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vacation procedures, which have been in place since at least 1960, were surely known
to both parties. It stands to reason that the City was familiar with its own Charter and
Ordinances, and that Xcel was familiar with the concept of vacation through its
extensive dealings with City rights-of-way.
Even if Xcel is correct that the parties were not referring to any formal vacation
procedure, we hold that under the plain meaning of the word, the City did not
“vacate” Fifth Street. Dictionary definitions of the word “vacate” include: “to
deprive of an incumbent or occupant,” Merriam Webster’s Collegiate Dictionary
1380 (11th ed., Merriam Webster, Inc. 2003); “to give up possession or occupancy
of . . . to give up or relinquish . . . to cause to be empty or unoccupied,” Random
House Webster’s College Dictionary 1442 (2nd rev., Random House 2001); “[t]o
cease to occupy or hold; give up,” The American Heritage Dictionary of the English
Language 1969 (3d. ed., Houghton Mifflin Co. 1996). The City has never fully
“given up” its interest in the street. For instance, the City has always owned and will
continue to own the street. The fact that the Met Council will operate and maintain
the LRT does not change this fact. Furthermore, given that Fifth Street is a public
right-of-way, the City never really physically “occupied” the street. Thus, Xcel’s
arguments that the City “ceased to occupy” Fifth Street when MnDOT constructed
the LRT do not persuade us. The City continued to “occupy” the street to the same
extent as it did before the LRT, insofar as it maintained its interest in the street. The
only difference is that it cooperated with the state for the construction of LRT on part
of the street.
Xcel insists that the City fully relinquished its interest in the street because it
“conveyed” the street to MnDOT pursuant to a “Cooperation Agreement,” to which
the City was a party. (Appellant’s App. at 1524-43.) However, the actual language
of that agreement states only that the City “convey access to or interest in” the street
to the extent necessary for the construction and operation of the LRT. (Id. at 1529.)
Contrary to Xcel’s arguments, the City only partly relinquished control over the street
in order to allow the construction and operation of the LRT tracks. We hold that this
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partial relinquishment of the City’s interest in Fifth Street to collaboratively and
cooperatively encourage the construction of a public project is not a “vacation” within
any meaning of that term. This is especially true given that Fifth Street will continue
to be open for vehicle and pedestrian traffic (under control of the City) even after the
LRT is operational.
Xcel argues that, at a minimum, § 7 of the Franchise Agreement is ambiguous
and therefore presented an issue of fact for the jury that precludes summary judgment.
For the reasons stated above, however, we find that the Franchise Agreement is not
ambiguous. The district court was therefore correct to decide the issue as a matter of
law on summary judgment. See Brookfield Trade Ctr., Inc. v. County of Ramsey, 584
N.W.2d 390, 394 (Minn. 1998) (“The construction and effect of a contract presents
a question of law, unless an ambiguity exists.”).
In summary, the Franchise Agreement does not provide for relocation costs to
Xcel under these circumstances. Therefore, Xcel must bear the cost of relocation of
its facilities under the traditional common law rule.
C. MnDOT’s Authority
Xcel argues that the district court erroneously read Minn. Stat. § 174.35 to vest
MnDOT with the police power necessary to create the LRT. That statute provides
“[t]he commissioner of transportation may exercise the powers granted in this chapter
and chapter 473, as necessary, to plan, design, acquire, construct, and equip light rail
transit facilities in the metropolitan area as defined in section 473.121, subdivision
2.” Minn. Stat. § 174.35. It is not disputed that as a state agency, MnDOT can only
exercise the police powers delegated to it by the state. See Peoples Natural Gas Co.
v. Minn. Pub. Utils. Comm’n, 369 N.W.2d 530, 534 (Minn. 1985). Xcel argues that
MnDOT’s authority under the chapters listed in the above statute are limited only to
“trunk highways” and not to city streets, see Minn. Stat. §§ 160.02, subd. 25 and
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160.01; Minn. R. 8810.3300, subd. 3, and therefore MnDOT did not have the power
to order Xcel to move its facilities out of Fifth Street.
This is not the correct meaning of § 174.35. The plain language of § 174.35
is itself a delegation of police power to the MnDOT Commissioner to “plan, design,
acquire, construct, and equip” the LRT line wherever the project would be located “in
the metropolitan area.” This plain meaning is supported by the context in which the
statute was enacted. When the legislature enacted this statute in 1993, the FTA’s
1985 Environmental Impact Statement showed that a portion of the proposed route
would not include trunk highways. (Appellant’s App. at 102-106.) We find it
unlikely that, given the breadth of the delegation of power to MnDOT under the plain
meaning of § 174.35, the legislature intended to limit the Commissioner’s power in
such a way to make it impossible for him to construct the LRT as planned. Instead,
we agree with the district court that:
For Xcel to argue that these statutes and regulations apply only to trunk
highways ignores the very purpose of the legislation: to permit MnDOT
to use its existing highway authority to create LRT. The legislature is
free to extend the application of existing rules by statute, and that is
precisely what it did when authorizing LRT under Minn. Stat. § 174.35.
....
. . . The Court is persuaded that the Minnesota legislature
expressly granted authority and police power to MnDOT to create the
LRT project, and that this authority sufficiently empowered the
department to order relocation of the Fifth Street utilities at Xcel’s own
expense.
N. States Power Co. v. Fed. Transit Admin., 2002 WL 31026530 at *9, 10 (D. Minn.
Sept. 10, 2002) (unpublished). Accordingly, we find that MnDOT and Commissioner
Tinklenberg possessed the power to order relocation of Xcel’s facilities from Fifth
Street.
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D. Reasonableness of Regulations
Xcel argues that its claim that MnDOT’s regulations were unreasonable under
Minn. Stat. § 222.37 and Minn. R. 8810.3300 was stated sufficiently in its Complaint
to satisfy the liberal notice pleading standards of the Federal Rules of Civil
Procedure. We believe, however, that the district court was correct to disregard this
claim.
Rule 8(a) of the Federal Rules of Civil Procedure provides that pleadings must
contain “a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a). The essential function of notice pleading “is to give
the opposing party fair notice of the nature and basis or grounds for a claim, and a
general indication of the type of litigation involved.” Oglala Sioux Tribe of Indians
v. Andrus, 603 F.2d 707, 714 (8th Cir. 1979). We do not believe that Xcel has met
even this low standard.
Xcel’s Complaint fails to mention the relevant legal standards that provide a
basis for their claim: Minn. Stat.§ 222.37 (providing that utilities that use public
roads for their lines will be subjected only to “reasonable regulations”) and Minn.
R. 8810.330 (providing that MnDOT’s deadlines must be “reasonable under the
circumstances”). The Complaint also fails to identify any MnDOT regulations as
unreasonable and, for that matter, does not even contain the word “unreasonable.”
There is simply nothing alleged in the Complaint that would have notified the
Defendants of this claim. This is especially true given that Xcel appears to have made
the tactical decision to pursue its “reasonableness” arguments in state court, instead
of federal court. See N. States Power Co. v. Minn. Dep’t of Transp., 2002 WL
555163 (Minn. Ct. App. April 16, 2002) (unpublished); N. States Power Co. v. Minn.
Dep’t of Transp., 2002 WL 2004718 (Minn. Ct. App. Sept. 3, 2002) (unpublished).
The assertion of this claim on the eve of summary judgment also weighs against Xcel.
Courts regularly deny motions to amend under these circumstances, see Overseas Inns
S.A. P.A. v. United States, 911 F.2d 1146, 1150-51 (5th Cir. 1990) (upholding district
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court’s decision to refuse leave to amend complaint when party sought to add a claim
in an effort to avoid summary judgment), and we believe that the same rationale
applies here.
Thus, while we recognize that the pleading requirements under the Federal
Rules are relatively permissive, they do not entitle parties to manufacture claims,
which were not pled, late into the litigation for the purpose of avoiding summary
judgment.
E. Constitutional Claims
Xcel also argues on appeal that the district court erred in holding that there was
no unconstitutional taking by the Defendants.5 Xcel points to a number of cases in
which courts have held that franchise agreements constitute constitutionally-protected
property rights, the taking of which requires just compensation. See, e.g., N.Y. Elec.
Lines Co. v. Empire City Subway Co., 235 U.S. 179, 192 (1914). As the district court
pointed out, however, “Xcel’s franchise with the City remains undamaged; Xcel
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.” N. States Power Co., 2002 WL
31026530 at *14. Xcel protests on appeal that the district court’s decision ignores the
fact that it was deprived of its right to compensation for relocation under § 7 of the
Franchise Agreement. As discussed above, however, the district court correctly
found that § 7 does not provide for compensation under these circumstances. Thus,
there was no unconstitutional taking.
5
Because Xcel provides no separate due process argument, we will assume that
Xcel’s references to the Defendants’ “violation of Xcel Energy’s due process rights”
is simply a recognition of the fact that the takings clause of the Fifth Amendment is
incorporated by, and applied against the states through, the due process clause of the
Fourteenth Amendment.
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F. Commissioner Tinklenberg
Finally, it is not necessary to reach the issue of whether the district court
properly decided that Xcel’s claims against Commissioner Tinklenberg violated the
Eleventh Amendment under the reasoning of Pennhurst v. Halderman, 465 U.S. 89
(1984). Analysis of whether Tinklenberg was a proper defendant would be
extraneous, given that we conclude that the district court’s dismissal of all claims
against all Defendants on summary judgment was correct. See In re Snyder, 472 U.S.
634, 642 (1985) (“We avoid constitutional issues when resolution of such issues is
not necessary for disposition of a case.”).
III. CONCLUSION
For the reasons stated above, the decision of the district court is AFFIRMED.
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